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| US Ambassador to Sri Lanka, Robert Blake (l) and Sri Lankan Secretary for the Ministry of Finance and Planning, Dr. P.B. Jayasundera sign an agreement on a US grant of $474,000 for oil exploration. Photo TamilNet |
The biding process for the remaining three blocks will open on May 1 2007 and licenses will be awarded in early 2008, according to Neil De Silva, Sri Lanka’s Director General of Petroleum Resources Development.
Meanwhile the United States is to award a grant of US$474,000 to Sri Lanka’s ministry of Finance and Planning to develop the country’s oil and gas sector.
The blocks being put up for bids are estimated to contain 1 billion barrels of oil and would significantly alter the country’s energy sector and economy.
According to the Central Bank of Sri Lanka, the country imports about 15 million barrels of crude each year, and also buys about 15 million barrels of oil products from abroad annually.
The Ceylon Chamber of Commerce says “the oil and gas industry has the potential to change the destiny of Sri Lanka.”
“Escalating oil and gas prices have not only led to the increase in the cost of living but also the reduction of competitiveness of Sri Lankan exports,” a CCC press release added.
However analysts feel the escalating conflict and the frequent sea clashes between the Sri Lankan Navy and the Sea Tigers off the northwestern coast would dampen the enthusiasm among major international players.
“Security is a real issue, and with there being so much exploration activity happening elsewhere, major international players could prioritize in safer areas,” says Tony Regan, consultant with Nexant Inc. in Singapore.
Meanwhile in a ceremony two weeks ago US Ambassador to Sri Lanka, Robert O’Blake signed an agreement to grant of US$474,000 to the Sri Lankan ministry of Finance and Planning.
The grant is to fund technical assistance to the Ministry of Petroleum and Petroleum Resources Development in support of “its efforts to develop a comprehensive oil and gas regulatory system and establish an organizational structure for the regulatory authority.”
"A well-developed regulatory structure is essential to attracting and keeping high-quality investors in the oil sector," Mr. Blake said.
"We hope our assistance will help Sri Lanka establish an open and transparent regulatory system that both protects Sri Lanka's interests and gives investors confidence that they can earn a worthwhile return on their investment."
In addition to developing the oil and gas sector in Sri Lanka India and China are also assisting development of other energy sectors by building coal-fired power plants.
The Chinese government is helping Sri Lanka build its first coal-fired power plant at Norocholai, north of capital Colombo, as the island seeks cheaper electricity.
India's largest power company, in December 2006 signed an agreement to build a 500 megawatt coal-fired power plant in the northeast of Sri Lanka.
However there are disagreements between Sri Lanka and India on the location of this plant in the increasingly violent warzone.
