Bids out for oil drilling

Rajmi Manatunga

COLOMBO: The Government will call for international tenders for oil exploration in three blocks earmarked in the Mannar basin from this month.

Petroleum and Petroleum Resources Development Minister A.H.M. Fowzie told the Daily News that the documents have already been released by the Ministry and the tender process was in progress.

"Around 200 countries have expressed interest in taking part in the oil exploration activities along Sri Lanka's sea belt. We hope that a considerable number of foreign investors will bid for these three blocks," he said.

The Minister said that as a precursor to the tender process, road shows were held in the United States, the United Kingdom and Malaysia to inform prospective investors of the opportunities with respect to oil exploration in Sri Lanka.

"We were able to hold three road shows in London, Houston and Kuala Lumpur on August 6, 7 and 23. The response we received from the business community in these countries was positive," he added.

Out of the eight blocks in the Mannar basin earmarked for exploration activities, two blocks have been given to India and China. The tenders have been called for three of the remaining six blocks.

Fowzie said that once the tender process is completed, they intend to commence exploration activities in the basin from August 2008. "Our objective is to produce our own crude oil by 2010 through oil exploration in the Mannar basin. I will shortly seek Cabinet approval to call tenders for conducting seismic surveys in the Hambantota sea as well," he said.

According to the Ministry, a 35 per cent tax will be charged on the profit earned by each company selected for oil exploration in the Mannar basin.

A permit will be issued in three stages to each company for eight years which could be extended for another two years on request. Each company will also be expected to permit the state owned National Petroleum Resources Company to make a 10 per cent investment in them.