After signing the Joint Study Agreement (JSA) on behalf of the government with the French company Total at the Petroleum Resources Development Secretariat (PRDS), Minister Weerakkody further said the ministry had sought Cabinet approval in this regard and a Cabinet paper had been submitted seeking approval for a revaluation of oil exploration and an aerial survey.
According to the minister the total investment amounted to USD 25 million and it would be used by Total to acquire seismic data, off the east coast of Sri Lanka. The total exploration area was 50,000 sq. km and the study would be completed within two years. The objective of the agreement is to explore marginal areas with limited data for hydrocarbon prospecting by conducting geological, geophysical and technical surveys, analyzing and interpreting the acquired data, and ultimately assessing the presence of commercially viable oil and gas.
Minister Weerakkody said Sri Lankan technical and academic staff to gain exposure to modern data acquisition and interpretation methods.
According to PRDS, the government would own the data from the point of acquisition and if it found a commercially viable oil or gas reserve Total had the right to negotiate a production-sharing agreement.
It notes that if the discussions are unsuccessful within a stipulated period, the government might open the reserve to other bidders and here again Total has the right to match the highest bidder for a specified period. All residual rights will lapse after 51 months.
Petroleum gas is available in two of the four blocks which have been explored in the Mannar basin by Cairn India at an investment of about USD 300 million but it abandoned the explorations last year.
Minister Weerakkody said currently Sri Lanka had no data available on the Eastern and Southern sea areas and, therefore, it was hard to find a suitable company for oil explorations due to lack of data. But, after Cairn India completed the data acquisition in Mannar basin, the government owned the data and it would go for international bidding within the next few months and the Ministry would make a formal announcement regarding the next bidding.
Many leading petroleum companies in the world including Petronas and Mobil had expressed interest in oil exploration in Sri Lanka, Minister added.
