ISSN: 1391 - 0531
Sunday March 23, 2008
Vol. 42 - No 43
Financial Times  

Need to get ‘best brains’ in oil exploration - point of view

By Trevor Jayetileke
Energy Consultant, Victoria, Australia

Oil exploration in Sri Lanka has virtually become a joke. In the early 70's when the Russians failed to locate oil in Pesalai it all ended up been called a hoax. A recent editorial in The Sunday Times FT gave it a Shakespearean twist calling it a 'Comedy of Errors' and an oil expert saying that it’s political rhetoric.

While I agree on most of what the STFT special columnist says I wish to make some constructive points in this very important issue and debate which he may have missed or failed to highlight. As we all know the upstream oil industry known commonly in petroleum jargon as Exploration and Production (E & P) has eluded Sri Lanka from the time of our independence. The root cause of all our economic and social problems is that we don't have a self reliant economic base and to this end finding oil/gas is all the more urgent because we have to depend on expatriates working overseas specially our young girls and mothers to earn the foreign exchange which in turn pays for the crude oil we import at a very high cost to the exchequer.

The last time we drilled an oil well was a wildcat in the Palk Straits 25 years ago which proved to be a dry hole and we are still on the starting blocks in the 'Mannar Basin' with 3 licences on offer. All the top officials in the Petroleum Resource Development Ministry and PRDS are on a 'Learning Curve' and like the blind leading the blind are following models and agendas which may not be in the best interest of our fledgling upstream oil industry and we have paid millions for 2D seismic which we already had in our archives. The Seismic/Fiscal Package seems to have only attracted strategic bidders that may fit in nicely with the the plagiarized Model/PRDA used as claimed by the expert oil columnist.

Resources they say is at the heart of most conflicts and the case of Aceh in Indonesia as an example and ours no different. The first oil exploration survey (Ariel) for the Indian sub continent and the Bay of Bengal was said to have been commissioned by an American company in India and its report handed over in 1950 to the Indian Government and the section on Sri Lanka to our government. According to our oil expert while India established ONGC to put India on the Global oil map in the early 50's our leaders must have put our report in the hard basket to gather dust or put away to the archives.The great rivers Ganges,Brahmaputra and Irrawaddy drain their sediments into the Bengal submarine fans.All the countries skirting the Bay of Bengal have had their share of oil and gas with the exception of Sri Lanka. Our leaders prefered to take-over the assets of the American/British Oil Majors and ended up with no crude oil. Forming the equivalent of our own E & P outfit like ONGC-India should be our top priority according to our oil expert, but more importantly we should explore the Cauvery Basin area in the North which is 1/3rd in our territorial waters which has been proved to be so lucrative to India on their side and not as frontier as the 'Mannar Basin' where we’re wasting money and time with no guarantee of return. Exploring the Mannar basin instead of the Cauvery Basin in the North is a very expensive mistake that should have been avoided.

The exploration tragectory has to be fast-tracked and should be adjusted to do the exploration of the identified potential areas simultaniously rather than piece-meal which cannot be handled by the PRDS on its own and should be shared with the provinces who are the true owners of the Natural Resource.

Oil is the one and only Macroeconomic Lever that could help the provinces to quickly and meaningfully contribute to the GDP of the Centre, and a 'Big Strike' can change the fortunes of Sri Lanka metaphorically overnight like what North Sea oil did for UK,Sweden and Norway in the 70's/80's. It can be done and cannot be scoffed at as political rhetoric. We have to have to get-together and have a 'Brainstorming Session' to find the way and for that you don't need only experts but a 'Creative Mind' which is said to be the best tool in oil exploration and make the difference (not why but "why not").


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