Promoting Petroleum – Sri Lanka Mulls National Oil & Gas Company

Sri Lanka’s Power and Energy Ministry is to set up a national oil and gas company to exploit offshore natural gas deposits found in the Mannar Basin.
Minister of Power and Energy Patali Champika Ranawaka in an interview with The Sunday Leader said that the government was of the view that harnessing natural gas from the two oil drilling wells – Dorado and Barracuda drilled by Cairn, was commercially viable.
“Cairn was given one block and they drilled four wells, two out of which natural gas was discovered. With this discovery their share prices too went up creating good capital gains for Cairn,” Minister Ranawaka said.
“However since government-run Ceylon Petroleum Corporation (CPC) is not equipped for we decided to call for fresh global bids to choose an investor for commercially developing natural gas deposits in the Mannar basin.”
Cairn Lanka announced that it would quit Sri Lanka in October, after world crude oil prices continued to plunge, rock-bottoming at US$ 43.46 in March this year from US$ 107 a barrel in June 2014.
Block SL 2007-01-001 in the Mannar Basin was awarded to Cairn Lanka in the bid round held in 2008. This deep-water offshore block is located in an area where water depths range from 400 to 1,900 meter. Cairn Lanka (Private) Limited, a wholly owned subsidiary of Cairn India, holds a 100% participating interest in the block.
The first phase of the programme in 2011 resulted in two successive gas and condensate discoveries: the CLPL-Dorado-91H/1z and CLPL-Barracuda-1G/1 wells. Cairn Lanka’s successful drilling programme – the first in Sri Lanka in 30 years – established for the first time, a working petroleum system in the Mannar Basin.
The exploration programme involved the acquisition, processing and interpretation of 1,753 sq km of 3D seismic data and a three well deep water drilling programme. The seismic programme exceeded the phase I commitment by 20% and the drilling programme exceeded the drilling depth commitment by 50%.
The programme resulted in two successive gas and condensate discoveries: the CLPL-Dorado-91H/1z well and, the CLPL-Barracuda-1G/1 well. The third well, CLPL-Dorado North 1-82K/1 was plugged and abandoned as a dry hole on 14th December, 2011.
“Following this success, Cairn Lanka has notified the government of Sri Lanka of its intention to enter the second phase of exploration. The support of the Government of Sri Lanka and an effective partnership with the relevant authorities in Sri Lanka, were instrumental in ensuring the successful completion of the first phase exploration programme.”
Although Cairn Lanka’s announced that its successful drilling programme – the first in Sri Lanka in 30 years – has established a working petroleum system in the frontier Mannar Basin; the Mahinda Rajapaksa regime was reportedly discontent with the little progress achieved by Cairn. Cairn had spent US$ 230 million for the exploration.
Crude oil prices has plunged nearly 20% in July alone and briefly dipped below US$ 47 a barrel on 28 July, whilst 2015 March prices marked the weakest since 2009.