Oil exploration bids to be finalised by October
by Lalin Fernandopulle
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Kishu Gomes
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The Ministry of Petroleum Resources will finalise bids by October
this year to conduct oil explorations in the Mannar Coastal basin,
Managing Director Chevron Lubricants Lanka PLC, Kishu Gomes told the
Sunday Observer.
He said prior to commencing work on oil exploration two roadshows
will be conducted in London and the US which will create more awareness
and bring in prospective investors for the project.
"Of the six basins two have been earmarked for India and China but
both countries have still not confirmed whether they would go ahead with
the project or not.
The bids for the rest of the basins will be finalised by October",
Gomes said. The agreement with the prospective investor will be on a
50-50 production sharing arrangement. The investor will have to buy the
seismic survey results from the government at Rs. 1 million.
Gomes said though hydrocarbon deposits have been confirmed in the
Mannar Coastal belt, striking oil is not 100 percent guaranteed.Though
oil deposits have been identified we do not know whether it is crude,
light or heavy oil deposits that exist in the location and the
technology needed to extract oil will be extremely costly.
It will take at least three years for the first bucket of oil to be
extracted from the time one wins the tender, he said. Oil exploration is
a good alternative but not the only option the country should look at in
solving the energy crisis. Sri Lanka depends heavily on the import of
costly fuel and global oil prices have an adverse impact on our economy.
The number of vehicles over the last 10 years has increased by 5
percent annually and last year it increased to 12 percent and this
increase is an indication of the quality of life that people are looking
for.
The electricity demand is increasing sharply and the country lacking
the right balance between thermal and other energy sources puts
unbearable pressure on the economy. The treasury recently said the oil
bills have increased by 50 percent annually.
The Government spends over Rs. 70 billion to fund the CEB, the
Railways and other vital State institutions which results in high
inflation and other fundamental economic issues.
The taxes on petrol and diesel are an added burden to industries and
consumers. The port delivery levy, excise duty, Provincial Council tax
and the VAT charge on the retail prices of goods adds up to the overhead
costs and purchasing capacity of consumers.
He said the drop in consumption in the lubricant industry by 6
percent shows the inability of consumers to keep pace with the
increasing price and to purchase the quantity they need.
The distribution cost is beyond manageable proportions due to the
transportation cost and poor road infrastructure which is a waste of
fuel and man hours.
Gomes said the Government cannot put the blame on the international
oil prices but needs a national plan to increase revenue, production,
reduce wastage, corruption and sell fuel at a reasonable price.
The world took 125 years to consume the first trillion barrels but it
will take only 30 years to consume the next trillion barrels. The era of
easy and cheap oil is over, Gomes said.
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