June 27, 2016 (LBO) - Sri Lanka could shortly approve petroleum exploration and drilling for two blocks in the Cauvery basin, as bidders in the 2013 licensing round have recommitted to their bids, a government official said.
"The government has already gone through the approval process for these bids, and bidders have recommitted to their bids," Saliya Wickramasuriya, director general of the Petroleum Resources Development Secretariat, told Lanka Business Online.
Although the award of exploration blocks will require fresh cabinet approval, both the Petroleum Development Resources Committee and Minister of Petroleum Resources Development have given their approval to this step, he said.
He added that while the current industry slump and lack of new data does not support a full-blown Licensing Round just yet, the Government had decided to make these awards based on work programmes committed during the international licensing round of 2013 with the intention of re-commencing petroleum activity in Sri Lanka.
Last year, Cairn India announced its withdrawal from Mannar Basin natural gas exploration following the global petroleum price slump. Cairn made this decision even though the economics within Sri Lanka could justify the investment in exploration. Sri Lanka is now preparing a national energy policy that brings together both petroleum resources development and power generation, Wickramasuriya added.
"The planned award is for two blocks out of twenty. The parties have committed to maintain or accelerate their work programme, partly assisted by the prevailing lower prices of goods and services in the industry. This means it's possible that we might see drilling commence within this year.
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Extensive data has been collected from seismic surveys and previously drilled wells in the Cauvery basin, he said. This data explains the reasons for why those earlier wells missed their targets. This means that today drillers can be more confident about their prospects.
"We have a good potential mix of oil, gas and condensate. The discoveries made recently in the Mannar basin were not of crude oil, but of gas and condensate, however large potentially crude-filled structures indicated on seismic are amongst our priority targets for the future.
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