Lanka to produce oil by 2010 - Fowzie

Uditha KUMARASINGHE

COLOMBO: Petroleum and Petroleum Resources Development Minister A. H. M. Fowzie yesterday disclosed Sri Lanka will able to produce it’s own crude oil by the year 2010 from oil exploration in the Mannar basin.

Eight blocks in the Mannar basin has already been identified to commence oil exploration activities. Of these eight blocks, two blocks have been given to India and China.

The Ministry has decided to call for tenders to give another three blocks to foreign investors for oil exploration, the Minister told a media briefing held at the Government Information Department yesterday.

The Ministry will conduct road shows in the UK, US and Malaysia to give these three blocks to prospective investors. The Ministry will call for tenders from these investors in October this year.

After these tenders are called, the Ministry intends to commence oil exploration activities in August, next year, he said.

The Ministry has paid 10.5 million US dollars to Norwegian Company TGS NOPEC to obtain the seismic data they collected on the Mannar basin.

Fowzie said: “At present world fuel prices are increasing every month. Therefore, if we can explore our own oil resources, it will be a great help to boost our economy. Steps should be taken to explore our oil resources by making maximum use of it.

The Minister said 20 countries are willing to come to Sri Lanka for oil exploration, including India and China.”

“It is believed that oil resources are available throughout Sri Lanka. Therefore, the Ministry has sought Cabinet approval to call tenders to conduct a survey in the Hambantota sea,” the Minister said.

Ministry Secretary A. P. A. Gunasekera said the Ministry expects to obtain maximum advantage for Sri Lanka from oil exploration activities. The Ministry under the Inland Revenue Act will charge 35 per cent tax from the profit earned by each selected company which will engage in oil exploration in the Mannar base.

Under three stages, the Ministry will issue a permit to a company to conduct oil exploration in Sri Lanka for a period of eight years. If a request is made by a company, there is a possibility to extend the permit of that company to another two years, he said.

Gunasekera said after tenders are called, the Ministry will allow the company which will provide more benefits to Sri Lanka to commence oil exploration activities here. When the agreements are signed, each selected company has to pay a signature bonus and production bonus to the Government.

In addition, each foreign company coming to Sri Lanka for oil exploration should allow the State-owned National Petroleum Resources Company to make a 10 per cent investment within their company, he said.