The government in Sri Lanka inked an agreement with France's Total S.A. for the exploration of two ultra deepwater blocks off the country's east coast, according to an announcement posted on the Petroleum Resources Development Secretariat (PRDS) website Wednesday.
Sri Lanka's Minister for Petroleum Resources Development Chandima Weerakkody signed the Joint Study Agreement (JSA) with Total on Feb. 18, the Ministry's PRDS reported.
"The objective of this study is to explore the two offshore blocks(JS5 & JS6) off the east coast for hydrocarbon prospectivity by conducting geological, geophysical and technical surveys, analyzing and interpreting the acquired data, and ultimately assessing the presence of commercially viable oil and gas."
The JSA includes a period of two years from the effective date for data acquisition and for processing and interpretation. If the study indicates commercially viable oil or gas reserves, Total holds the right to negotiate a production sharing agreement with the Sri Lankan Government, failing which the authorities may open the blocks to other bidders. In such a situation, the French oil major retains the right to match the highest bidder for a specified period.
The announcement emphasized that the study will cover extensive collaboration and technical knowledge transfer without a production commitment, and is expected to contribute extensively in exposing Sri Lankan technical and academic staff to modern data acquisition and interpretation methods.
The Sri Lankan Government will also receive a ground rental of $1 per 0.62 square mile (1 square kilometer) for the entire acreage of the JSA valued at approximately $49,000 (LKR 7 million) per annum.
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