Sri Lanka’s oil quest begins

Sri Lanka’s oil exploration activities began yesterday with the drilling of the first well by Cairn India in the Northwestern Mannar basin. Economic Development Minister Basil Rajapaksa said the work, which began without any fanfare, would bring massive economic benefits for the country.

The Mannar basin is believed to hold over one billion barrels of oil.

Cairn Lanka, a subsidiary of Cairn India, signed the Petroleum Resource Agreement with the Sri Lankan government in July 2008 to explore oil and natural gas in Mannar.

The Indian company has been given the rights to drill three oil wells in Mannar over the next few months. Commercial production is several years away.

Minister Rajapaksa told reporters that if the project becomes successful Sri Lanka would no longer need to import oil from other countries.

The exploratory work is expected to cost $110 million.

The company contracted a deepwater rig from a Japanese company to embark on the project. The exploration area is 3,000 sq km with water depths ranging from 400 metres to 1,900 metres. The company plans to drill three wells.

“Four months after drilling, we will be able to say if there is oil and gas in the basin and it will take another two years to assess how much oil and gas are there.

Altogether, if there is oil, it will take a minimum of six years to start commercial production,” Stuart Burley, the head of geoscience at Cairn India, told the media earlier.