Sri Lanka to Offer Three Block in Offshore Mannar Basin
Sri Lanka's Ministry of Petroleum and Petroleum Resources Development will be calling for tenders beginning next month for oil exploration in the Mannar Basin. According to the Minister of Petroleum and Petroleum Resources Development A.H.M Fawzie, three road shows will be launched in September to present data on three blocks in the offshore Mannar basin. The road shows will be held at London, Houston and Kuala Lumpur. Minister Fawzie added more than 20 countries including India and China who already own two blocks at the Mannar Basin have agreed to participate in the bid round. The Minister further stated that the Government is committed to conduct a transparent and efficient tender process with exploration licenses being awarded in early 2008.
However, the applicants will have to pay signature bonds and production bonds to the Sri Lankan government. Also they will have to pay a 10% loyalty fee to Sri Lanka during the exploration period.
The permits will be for a period of eight years and will consist of three phases. The permit will be broken up as follows: three years for the first phase, two years for the second phase and three years for the third phase. If additional exploration is needed, a two extension could be granted.
The Mannar Basin has seen relatively minor exploration activity in the past; however, recent seismic data have indicated that the basin has significant potential for hydrocarbon accumulations.
According to the reports by the Government, seismic data shows more than 1.0 billion barrels of oil lie under the sea off Sri Lanka's northwest coast, though no reserves have yet been proven. If proven, the reserves would be a major boost for the country, which produces no oil and imported $2.1 billion worth in 2006.