Comment

Oil to change nation's history?

The Government recently announced that oil exploration in the North West and North coastal and offshore fields will start soon and will call for tenders.

It is not a simple matter. However, neither the media nor people in the country took it seriously. According to evidence if exploration begins there is a strong probability of getting the much valuable oil.

The early oil exploration in these fields from 1967 says that there is strong evidence of formation and concentration of hydro carbon in these fields.

From the 1960s to 1974 Russian experts such as Dr. Calinan conducted extensive research and even drilled test wells. Their final suggestion was that petroleum resources would be available at a depth of around 2500m.

Oil would definitely change the history of this nation and even the life of every individual will change drastically. Then why has such an important topic not become important to our people?

There may be several reasons to ignore this windfall that would bring considerable relief to this poor country.

Firstly, for over 59 years our politicians have drawn up thousands of such dream plans of making this country a heaven and people know how they materialised. Therefore people may not pin any hope on what prosperity oil may bring.

Secondly, the oil exploration has been dragging on for many years. If we consider the recent development, assigning the Norwegian company TGS Nopec for seismic surveys was a controversial issue and the government last year paid 10.5 million dollars to buy the data.

There is no assurance how that data would be used, whether it would be sold to a third party or not. People may also think that even if gold is found in this country it will not make any change to their lives and it would benefit a small coterie including the politicians.

However, this is not a matter that can be ignored and let a few politicians and government officials to handle and decide on everything. There should be strong participation of private sector, professionals and other concerned groups and a greater transparency.

There should be wider discussions over the transactions that are taking place today. Oil has brought not only wealth and happiness to the countries that are blessed with it but also misery in most cases.

The reason is that oil is not merely a business and economic matter but it is one of the top political issues in the world today. Oil brought all the misfortune to the Iraqi people and a similar situation is being experienced in Iran, Sudan and all poor countries with oil resources.

Isn't it the same here too? At first sight today the allocation of oil field (plots) are taking place without considering the economic interest of the country or the people.

The media reported that already India's state-run Oil and Natural Gas Corp (ONGC) has been awarded a block in the Mannar basin and a Chinese company secured the other bid. This is totally related to regional politics and not to any advantage of the future of the country.

The transparency of the past agreement was a big issue and some sectors argue that the oil resources in Sri Lanka are the main reason for the extension of the ethnic issue in the country. They say at any point when the issue is going to end whether it is political or military some external force will get activated and prevent it.

They have facts and figures to justify their arguments. The first agreement signed with TGS Nopec Geophysics Company AFT of Norway in 2001 is still kept in the dark.

However, the second agreement signed in 2003 referred to this 2001 agreement. In 2003 the UNF Government signed the agreement to hand over the seismic surveys to the TGS Nopec just prior to the signing of the most controversial and Norway backed MoU with the LTTE.

They also said that our peace broker Eric Solheim is an oil exploration expert by profession. Then why don't people see oil in politics? The interesting factor here is that the agreement was signed before the relevant bill was passed in Parliament. The Petroleum Resources Development Act No. 27 of July 26, 2003 was certified on September 9, 2003.

The next question is who will manage this new unknown treasure. Ministry officials who don't even know the alphabet of the oil industry have occupied institutions already for the purpose. In Sri Lanka we don't have oil experts but there are Sri Lankan oil experts in other countries and we should seek their assistance.

Else we will have to depend on foreign companies that are not honest in this lucrative business in any part of the globe or our corrupt bureaucrats will sell them for personal gain. History compels us to ponder over this worst-case scenario.

It is the responsibility of the authorities to do the transaction in a transparent manner but today there is a lack of transparency. Plots have already been awarded but nobody knows for sure how the revenue and profit will be shared.

As the investment is extremely high and the government and local private sector is not in a position to invest we have to seek foreign partners. However, world experience proves that those multi-national oil giants are draining all the wealth leaving the oil producing countries poor.

Nigeria is one of the main OPEC countries but it still belongs to the third world. East Timor is experiencing a similar scenario. Royalty, Product share and petroleum tax are the three revenue components we have to consider at the time of awarding the oil fields.

In Venezuela, previous governments entered into agreements with very low royalty and tax. Recently President Hugo Chavez increased the royalty to 23% and tax to 50% considering the interest of the country.

Setting up a separate ministry for petroleum resource development is a commendable act of President Mahinda Rajapaksa. The authority is now with the Ministry. However, the chances still of losing this valuable opportunity are high because the forces that are interested in this treasure are very powerful.

Vigilant and knowledgeable organisations of all stakeholders to bring the maximum benefits to the country is the number one priority today. It will strengthen the government's hand to face any regional or international force and take decisions in the best interests of the country and the people.