Financial Times

Oil exploration soon in the Mannar Basin

By Natasha Gunaratne

An agreement is expected to be signed during the course of the month between the government of Sri Lanka and Cairn India Ltd to commence offshore oil and gas exploration in Block 2 in the Mannar Basin.

Minister of Petroleum and Petroleum Resources Development, Mr. A.H.M. Fowzie told The Sunday Times FT this past week that after the signing of the agreement, Cairn will be able to commence work. Prior to the signing of the agreement, Mr. Fowzie said the government has asked Cairn to corporate with a Sri Lankan company. "We don't know which company they will choose. That is their business," the minister said.

Mr. Fowzie added that no decision has been reached on any course of action on the other two blocks, 1 and 4 which were also open for bids. It was later decided that only Block 2 would be open for bids. Initially two other companies, ONGC Videsh Ltd and Niko Resources (Cyprus) Ltd also submitted bids for the blocks. A decision which was supposed to have been made by the end of April 2008 was continually delayed due to various reasons which some insiders and experts have contributed to infighting between the Ministry, the Petroleum Resources Development Secretariat and the Central Bank (CB) which was asked to get involved at the request of the government. The CB's role was primarily to conduct research on oil exploration and to advise the government.

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