Business Times

‘New questions over Lanka's bid to strike oil’

Right of Reply

The Business Times has received the following letter from Mr Chas Charles, Chief Executive Officer, Hayleys Energy Services Lanka (Pvt) Ltd:

“I refer to Mr. Dulip Jayawardena’s article titled ‘New questions over Sri Lanka's bid to strike oil’ appearing in The Business Times of November 6 that had numerous inaccuracies and errors which are particularly detrimental to Hayleys Energy Services Lanka (Pvt) Ltd (HES) of which I am the CEO.

Mr. Jayawardena seems to have unfortunately based some of his comments on an article that appeared in another newspaper recently which itself contained many errors which we have taken the liberty of bringing to the attention of the Editor of that publicaion.

This mis-reporting, and consequent errors in Mr. Jayawardena’s article, stem from the Desahabandu Vidya Jyothi Eng. (Dr) ANS Kulasinghe Memorial Lecture at the Wimalasurendra Auditorium, Institute of The Institution of Engineers, Sri Lanka on Tuesday, October 26, 2010 which I delivered on the invitation of the Institute in my personal capacity and not in my role as CEO of HES.

To set the record straight I would like to highlight some of the inaccuracies made in Mr. Jayawardena’s article and make a few comments for the benefit of your readers:

1. HES was set-up to provide logistics support services for the Oil & Gas exploration activities in the Mannar Basin and to all the potential blocks in Sri Lankan territorial waters. HES has indeed already provided some logistics support services to subcontractors of Cairn Lanka (Pvt) Ltd in their operations at the Mannar Block. However, contrary to Mr. Jayawardena s assertion HES is NOT a partner of Cairn Lanka or of Cairn India and at no time at the lecture (nor any other event) did I explicitly or implicitly infer such a relationship.

2. Mr. Jayawardena also asserts that I am promoting Halliburton (from which organization I retired a few years ago) to get involved in oil drilling here. All I can say that it is preposterous to even suggest that I – or for that matter anyone else – can influence the likes of Cairn or any other O&G contractor who have very stringent contracts processing divisions on their choice of sub-contractors. In fact from HES’ perspective it is to our detriment to promote any particular sub-contractor as we are general service providers to any sub-contractors that the O&G companies working here may chose to work with.
The only pointed comment that I made at the lecture was that Sri Lanka would benefit tremendously if companies like Halliburton, Schlumberger, Baker come to Sri Lanka as they will provide a boost to developing local talent (particularly engineers) in the O&G industry to international standards.

3. I also indicated that it was my opinion (based on the work done so far and my experience in this field) that drilling at the Mannar block would commence sometime during the first half of 2011. I did not however mention anything to the effect that the drilling contract would be awarded next month (or at any other specific time). In fact I am not in any position privy to such information nor to make a comment on the subject.

I did however suggest that there has been a slight delay to the original exploration schedule and that I believed this may be partly attributed to the fact that this is a green field project in Sri Lanka. The exploration in the Mannar basin is a complex deep sea exercise and has absolutely no comparison in terms of scale to the other shallow-water exploration done previously in our waters.

4. Mr. Jayawardena also refers to my opinion that ‘we will enjoy the first barrel of oil by 2016’ and contrasts that with another time estimate on the subject. I made the point that even if exploratory drilling is indeed successful – as we all hope that it would – there is a lot more work to be done before commercial production can commence to produce that ‘ first barrel of oil’. As I have clearly articulated, this too is my personal opinion based on my experience and my estimate of how I see things unfolding here.

5. Mr. Jayawardena also contests my estimate of Rs.25 million to date on exploratory activity. Once again this is my personal estimate on the basis of the work done or being done on 3D Seismic Survey, Met Ocean Survey, interpretation of 3D data etc.

6. With regard to the mis-quoted statement in the media ‘However, the whole drilling of one well would cost up to a handsome US$ 400m’, the correct and exact reproduction of my comments is as follows: ‘In today’s prices to design, fabricate and install an FPSO ( floating production, storage and offloading) will be around $ 400 million in these waters. We also need to think about what we do with the produced oil or gas or both’.

7. Mr. Jayawardena also questions the authority under which I have made various comments in the course of my presentation. The answer is simple, for I spoke not for or on behalf of anyone. I was invited by the Institute of Engineers to make a presentation on the subject of O&G exploration in Sri Lanka for the benefit of their membership and others in the audience based on my extensive experience in the industry and that’s all that I did.

8. He also asks if HES has any equity interest in CLPL and the short answer is negative, as it has no such interest either directly or indirectly.

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