Sri Lanka begins oil exploration in Mannar basin

Aug 06, Colombo: Cairn Lanka, a wholly owned subsidiary of Cairn India commenced drilling for oil in the Mannar basin off Sri Lanka’s northwestern coast Saturday, Economic Development Minister Basil Rajapaksa has told reporters in Puttalam.

The Minister told reporters that if Sri Lanka is successful finding oil in Mannar Basin, which is believed to hold around one billion barrels of oil, the country would no longer have to depend on importing oil from other countries, a prospect that would save billions of dollars to the country.

Cairn has said earlier this year If Sri Lanka’s drilling program is successful then commercial oil production can be expected by 2014 with a billion barrels.

The Company has contracted a deep-water drillship from a Japanese company to launch the project.

Cairn signed the Petroleum Resource Agreement (PRA) with the Sri Lankan government in July 2008 to explore oil and natural gas in the Mannar Basin with an investment of US$110 million, spread over three years.

According to the Agreement, Cairn will start exploration activities in one of the 8 blocks in the Mannar Basin which covers 3,400 sq. km. at depths between 200 to 1,800 meters.

The company conducted a full Environmental Impact Assessment (EIA) as required by the Sri Lanka Central Environmental Authority and Marine Pollution Prevention Authority. Earlier in 2010, the company acquired 3D seismic data on 1,750 km2 area of the Mannar basin.

Mannar basin has eight oil and gas exploration blocks and two of them have been granted to China and India. Russia’s largest oil company, Gazprom also has indicated plans to take part in the exploration of offshore oil in the Mannar basin.

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