ISSN: 1391 - 0531
Sunday March 9, 2008
Vol. 42 - No 41
Financial Times  

Experts for oil exploration

One bright spark dubbed it a ‘comedy of errors’ when two key institutions last week scrambled or outdid each other to get the best brains in oil exploration.

This is not the first time Sri Lanka is dabbling in oil exploration. In the 1970s under the Sirima Bandaranaike government attempts were made in Pesalai off the Mannar coast to no avail. Money was lost but the current attempt is even worse – Sri Lanka is going to lose money even before the research and exploration begins!

The Sunday Times FT has chronicled the drama surrounding TGS-NORPEC, the Norwegian firm involved in oil research off the Sri Lanka. Ultimately in a deal that went sour, the government had to pay for the data which was rightfully ours. The worst was to follow, the Norwegian company was also selling this data publicly and government officials and ministers were struggling to come up with an explanation that didn’t hold any water. The fact remains we screwed up on that deal at the cost of the taxpayer.

Now comes what is going to lead to a bungling of the entire oil exploration process. The Central Bank last week placed advertisements for a whole range of experts in oil exploration. That annoyed Petroleum Resources Minister A.H.M. Fowzie who has not taken too kindly to interference in his backyard. “Keep off my territory” is what he literally told this newspaper last week, firmly saying there will be no coordination between the Ministry and the Central Bank on this work.

Then enters the Petroleum Resources Development Secretariat (PRDC), an institution which we hear some sections in the government are not happy about and hence the Central Bank involvement. A local news agency has quoted PRDC head Dr Neil de Silva as saying that his institution plans to recruit a new set of officers and experts, and if local experts are not available, foreigners would he hired!

So here we have three sets of people/institutions – the Central Bank, the PRDC and the Ministry – ostensibly working in different directions for the same cause at huge cost to the country.

Little wonder then that we have reached a stage of development where every two or three steps we take forward, we go four to five steps backwards!Comedy of errors is a mild term to describe the crisis that is evolving in the oil exploration industry which is going to be lucrative for some people even if we don’t strike gold (oil).

Our oil specialist Duleep Jayawardene has repeatedly raised issues over the oil exploration drama and last week his article on the new model contract said we had virtually copied a model from the India contract. Now plagiarism is being added to corruption.

A couple of months back too a local expert who had been knocking on the doors for sometime with a proposal on oil hedging, suddenly found the Central Bank selling a similar idea to the Ceylon Petroleum Corporation. The local expert was furious. In the meantime little is being said about hedging and the public is unaware in ‘simple’ language about the CPC’s hedging efforts and as to whether the consumer has benefited. It may be reducing losses to the CPC but it isn’t certainly bringing down oil prices here.

This week another private investor said he was shocked to find that his proposal for a budget airline had been grabbed and literally copied – lock, stock and barrel! The state of this country where cheating is the name of the game.


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