Sri Lanka seeks bids for oil exploration
Wednesday, 5 September 2007
COLOMBO, Sept 4 (AFP): Sri Lanka plans to kick off a roadshow next week to attract international investors to explore oil off its northwestern shores, the petroleum minister said yesterday.
Seismic surveys conducted by Norway's TGS Nopec have shown that there was potential for oil and gas in the Cauvery basin off Mannar, minister A. H. M. Fowzie told reporters in Colombo.
"Roadshows have been planned for Houston, London and Malaysia to present data on three of the eight blocks before bids open to investors from October to end-January next year," Fowzie said.
Successful bidders, who will get an eight-year license to prospect oil, have to pay the Sri Lankan government a 10 per cent royalty fee on oil produced and a 35 per cent tax on profits, he said.
Sri Lanka estimates the basin to carry oil reserves in excess of one billion barrels. If oil explorations are successful, Sri Lanka might be able to produce oil within the next three years, he said.
Two blocks in the basin out of the eight have already been allocated to the governments of China and India, which have to pay a 100-million- dollar deposit each for the privilege.
Companies nominated by India and China also have to hand over a 10- million-dollar payment to secure the oil blocks without a competitive bidding process.
The deposit will be set off against future revenues if these countries strike oil, Fowzie said.
Licenses for the three blocks that are immediately on offer plus the two taken by India and China will be awarded to firms in the middle of next year.
In the early 1970s, Sri Lanka drilled seven wells in the Mannar region with help from the former Soviet Union, but found no oil.
The country continues to import all its petroleum.
Seismic surveys conducted by Norway's TGS Nopec have shown that there was potential for oil and gas in the Cauvery basin off Mannar, minister A. H. M. Fowzie told reporters in Colombo.
"Roadshows have been planned for Houston, London and Malaysia to present data on three of the eight blocks before bids open to investors from October to end-January next year," Fowzie said.
Successful bidders, who will get an eight-year license to prospect oil, have to pay the Sri Lankan government a 10 per cent royalty fee on oil produced and a 35 per cent tax on profits, he said.
Sri Lanka estimates the basin to carry oil reserves in excess of one billion barrels. If oil explorations are successful, Sri Lanka might be able to produce oil within the next three years, he said.
Two blocks in the basin out of the eight have already been allocated to the governments of China and India, which have to pay a 100-million- dollar deposit each for the privilege.
Companies nominated by India and China also have to hand over a 10- million-dollar payment to secure the oil blocks without a competitive bidding process.
The deposit will be set off against future revenues if these countries strike oil, Fowzie said.
Licenses for the three blocks that are immediately on offer plus the two taken by India and China will be awarded to firms in the middle of next year.
In the early 1970s, Sri Lanka drilled seven wells in the Mannar region with help from the former Soviet Union, but found no oil.
The country continues to import all its petroleum.