Sri Lanka should tread warily over the discovery of natural gas in Mannar

| by Pearl Thevanayagam

(October 09, London, Sri Lanka Guardian) Sri Lanka should not start celebrating that it will strike oil in two years’ time off Mannar basin. Cairn Energy’s [ the subsidiary of which is Cairn Lanka (Private) Limited which was awarded the Block SL 2007-01-001 in 2008 Sri Lanka bid is a wholly owned subsidiary of Cairn India and holds a 100percent participating interest in the Mannar block] shares were down by 37 percent compared to its level six months ago following its drilling off the coast in Greenland which turned up three successive dry wells in 2010.

The Mannar Basin in Sri Lanka is a frontier petroleum province that is yet to be explored. The Block SL 2007-01-001 was awarded to Cairn in the 2008 Sri Lanka bid round. Cairn Lanka (Private) Limited, is a wholly owned subsidiary of Cairn India and holds a 100% participating interest in the Mannar Block.

Based on the 3D seismic interpretation, several prospects and leads have been identified and technical work to understand the petroleum system in this basin is ongoing. The drillship ‘Chikyu’ has been mobilised and the three well exploration drilling campaign in the SL 2007-01-001 block commenced in August 2011.

The commerciality of the discovery of natural gas is confounded by the fact the discovery was made at a depth of 4,300 metres (14,000) below sea level. Cairn India says that further drilling is required.

Although President Mahinda Rajapakse had announced the discovery of natural gas during explorative drilling off Mannar Coast while addressing council workers in Kandy where local elections are due tomorrow the announcement is unlikely to swing voters in his favour.

Cairn started drilling in the Mannar Basin off Sri Lanka after seismic studies suggested oil and natural gas deposits. According to Cairn India spokesman Sourav Das the block where the discovery was made is just south of the porolific oil and gas producing Kavery Basin (India).

Sri Lanka, which depends on imports for all its petroleum requirements, has also offered blocks to India and China.

Cairn Energy is spending £400 million this year alone in its efforts to strike oil. Besides, Sri Lanka is answerable to environmental protectors in that it should not become another Irina Jaya debacle which displaced thousands of villagers in Indonesia in mid-nineties.

Sources: Reuters, AFP, The Hindu