Sri Lanka to Offer Offshore Blocks in Licensing Round

The Sri Lankan government will issue tenders for exploration off the coasts of Mannar and Hambantota during the latter part of 2003. The government believes the first area of importance is Mannar where reports indicate the presence of hydrocarbons. Minister of Power and Energy, Karu Jayasuriya, is expected to present a proposal for the exploration of oil, in Parliament this month.

Since 1970s there has been reports about the existence of oil in some locations, around the coasts. A few seismic surveys have been carried out, including a survey around the coasts of Mannar, by a Canadian company, who in the mid-1980s had favorable responses.

What is termed as Phase II of seismic surveys is expected to begin shortly, following an Act of Parliament. Worldwide tenders are to be called to conduct the survey, Minister Jayasuriya said.

All previous evidence points to the Kovari Basin, along the Palk Strait, where Sri Lanka is most likely to make a discovery. Approximately 65 percent of the Kovari Basin is within the Indian Exclusive Economic Zone (EEZ), where oil exploration is ongoing. The balance 35 percent is inside Sri Lanka's EEZ.

It is also expected that Petrocan, a Swedish geophysical company, will conduct a satellite gravity survey within a selected offshore area around Sri Lanka, with the objective of locating new sedimentary structures that may contain hydrocarbons.

Petrocan would be bound by the Petroleum Reserves Agreement, being formulated by the Ceylon Petroleum Corporation, a spokesman for the Energy Ministry said.

The survey will cover an area of 302,000 square kilometers at a cost of US$ 605,000. Of the total cost, a sum of US$ 325,500 would be borne by Petrocan, and US$ 192,000 by the Swedish government aid agency, SIDA, out of funds allocated to Sri Lanka.

Under this agreement entered into in January 2002, Petrocan submitted its technical report to the Ceylon Petroleum Corporation in July 2002. A final report was submitted in January 2003.