Cairn India will commence 3D seismic surveys in the Mannar Basin off the coast of Sri Lanka on December 10 upon arrival of the company’s vessel in order to start identifying oil reserves.
Minister of Petroleum and Petroleum Resources Development A.H.M. Fowzie told the Business Times this week that the seismic surveys will take approximately one month to complete and after that the next phase of exploration can begin in early 2010. He said the expenses for the 3D seismic surveys will be borne by Cairn India and the money spent by the company will be recovered once drilling starts.
Mr. Fowzie pointed out that there are also reports available from the 2D seismic surveys that were conducted a few years back. Previous Business Times reports on the Norwegian company TGS Nopec that conducted the 2D surveys set off a firestorm after it was revealed that the company was paid US$8 million by the Sri Lankan goernment for the data gathered in 2005 which belongs to the government but was being sold by the company through the Internet. The government also had to pay the company to terminate the agreement.
Experts have pointed out problems with the contract between the government of Sri Lanka and Cairn India which was awarded the tender for exploration on the block in the Mannar Basin in 2008. One expert, retired Economic Affairs Officer of the United Nations ESCAP and Business Times special correspondent for marine affairs Dulip Jayawardena says that according to the signed Petroleum Resources Agreement (PRA), Cairn Lanka (Pvt) Ltd., a wholly owned subsidiary of Cairn India, should have begun the first exploration phase in April 2009 at an estimated cost of US$112.1 million. Mr. Jayawardena also stated that it appeared as if Cairn Lanka was dragging its feet on starting up exploration activities and is trying to tie up the Mannar survey with the commitments that Cairn India has in India.