Oil drilling begins next Jan

By Sandun A. Jayasekera

Cairn (India) will drill three wells in block M2 in the Mannar Basin between January – March next year, while Sri Lanka will call international tenders for the rest five blocks within this year, Petroleum Minister Susil Premjayantha said.

“In the first bidding in the first part of 2007, Sri Lanka offered three blocks, C1, C2 and C3 in the Cauvery Basin and five M1,M2,M3,M4 and M5 in the Mannar Basin when  it called international tenders after an international road show and Cairn (India) won a bid as only the Indian company was able to meet the conditions of the tender and was offered block M2 for oil exploration,” Minister Premjayantha said.

Cairn (India), the Indian arm of the British energy company, has already conducted Three Dimensional Seismic Tests in the last couple of years and on the results of data collected from these tests, is now in a position to drill oil wells in M2 block, he added.

Cairns (India) will use its know-how and machinery and manpower to drill test wells off Jaffna, he said.

Five blocks in the Mannar Basin, M1, M2, M3, M4 and M5 situated off North West coast have been lined up for this year’s international tenders, Minister Premjayantha added.

“The decision on conducting an international road show for these blocks will be taken at the next ‘Petroleum Resources Development Committee’ meeting scheduled to be held on June 3rd, he said.

Those who are bidding, would have to collaborate a minimum 10% of oil exploration with Sri Lanka National Oil Company, s fully government owned venture. In addition, all contractors are required to pay 35% income tax on petroleum profits and another 10% in  divided remittance tax according to the provisions of the Inland Revenue Act.

Sri Lanka has identified and demarcated 12 blocks vis-à-vis three in the Cauvery Basin (off North East coasts of Sri Lanka), eight in the Mannar Basin (off Western and North Western Coasts) and one in the Southern Basin (off Hambantota)  for oil exploration and will call international  tenders for all blocks except M2.