Cairns to begin oil exploration in Mannar Basin early 2009

Colombo: The Indian operations of Cairns Energy to begin oil exploration activities along the Mannar basin early next year. The company has been awarded exploration permit by Sri Lanka Government.

Director General Petroleum Resources Development Secretariat (PRDS) Dr Neil de Silva said: “With the obtaining of licences from PRDS, the company has formed a local company called Cairns Lanka Limited, which is expected to invest US$ 112 million for the first phase of the project,”

Dr de Silva disclosed this yesterday in a seminar on petroleum exploration in Sri Lanka, organised by the Sri Lanka Foundation Institute (SLFI) in collaboration with the Geological Society of Sri Lanka.

Cabinet approval was granted and the company obtained the exploration licenses in October this year and hope to start petroleum exploration by January, he said.

The oil exploration project has been categorised into three phases. Phase one of the project will start early next year in a 3,300 Km2 area in the Mannar basin. Once the oil exploration work is started it would take at least four years to obtain the first oil barrel,” de Silva said.

Upali Premaratne of the Central Bank said there is a 60 per cent probability of having petroleum in the Mannar and Cauvery basins which seems to be a gamble for oil exploration companies to invest in these areas.

“If oil is discovered they will have to form a new company called National Oil Company in collaboration of the Indian company, which will pay tax to the Government,” Premaratne said.