Oil exploration tenders in May

by Ranga Jayasuriya

The government is expected to call for worldwide tenders in May for oil exploration in the Gulf of Mannar, the Petroleum Resource Development Ministry said as seismic surveys indicated potential offshore oil deposits in the coastal line.

The seismic studies conducted by the US based geophysical company T. G. S. Nopec revealed sizeable petroleum and gas reserves in the 35,000 square kilometres stretch of coastal line from the Gulf of Mannar to Unawatuna.

"The plan is to call for tenders in May," Secretary, Petroleum Resource Development Ministry, A. P. Gunasekara told the Sunday Observer. He said the specialist agencies of the Ministry were now working on a regulatory framework on oil drilling upon which the government would call for tenders.

The government earlier purchased data of seismic surveys from the geophysical company T. G. S. Nopec.

The data, now stored in a facility in Australia, could be purchased by interested parties.

The purchase of data from T. G. S. Nopec came after the government abrogated the agreement with the T. G. S. Nopec over seismic studies in the western coast. An estimated $10.5 million was paid to the geophysical company for the termination of the agreement and purchase the data of seismic surveys. "Data is now stored in Australia, because we don't have expertise here to deal with them," Gunasekara said.

The data of the entire area which was subjected to the seismic survey will cost one million US dollars while data on any specific area would cost 300 US dollars for each linear kilometre.

The government has sought international expertise to set up a regulatory mechanism on oil exploration which also includes the terms and conditions of Bid Document.

A specialised agency - National Procurement Agency - and a technical evaluation committee has been set up to provide expertise and technical assistance in oil exploration. The cabinet in July this year approved a proposal to provide a bloc each to India and China on "nomination" for oil drilling.

International companies and other prospective investors expect a sound regulatory framework on oil exploration before they decide on their investment.

"It is important for Sri Lanka to formulate a regulatory framework (on oil drilling) to lure investors," said Director General of Petroleum Resource Development Secretariat Dr. Neil R de Silva.

Sri Lanka spends nearly two billion US dollars on petroleum exports annually.

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