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Tue, 29 July 2014 19:42:34
Sri Lanka offshore potential ignored by oil majors
05 Feb, 2008 18:18:55
Feb 05, 2008 (LBO) – None of the world's major petroleum companies has bid for the offshore exploration blocks offered by the Sri Lankan government in the Mannar Basin, despite initial interest, officials said.
They said the lack of interest from oil majors may have been because of more promising discoveries elsewhere, the comparatively small size of the Sri Lankan deposit and the risks involved.

"Generally, there are three factors investors would critically evaluate," said Kishu Gomes, managing director of Caltex Lubricants Lanka, the Sri Lankan unit of the Chevron Texaco oil multinational, which also expressed initial interest.

"These are the size of the opportunity, the country's situation, mainly security and the terms and conditions of oil exploration licenses."

Government officials had said earlier that most of the world's oil majors had expressed an interest in the offshore blocks on offer during roadshows in major oil centres.

But last week the government said only three firms, mainly regional players focusing on India and south Asia, has actually submitted bids.

These were ONGC Videsh, Cairn India, and Niko Resources of Cyprus.

ONGC Videsh is a subsidiary of state-owned Oil and Natural Gas Corporation, India's largest oil and gas company.

Cairn India, is owned by London-listed Cairn Energy, the biggest foreign petroleum operator in India, both onshore and offshore.

Canada-based Niko Resources is exploring for and producing petroleum and natural gas in Canada, India and Bangladesh.

"Oil firms from around the world took a look at it (Mannar offshore exploration blocks) initially," said Gomes of Caltex Lubricants Lanka.

He said Chevron Texaco "decided in the early stages" not to go through the bidding process because of other interests elsewhere.

"We knew from the beginning that the opportunity in Sri Lanka in relative terms was small – considering that globally they have discovered larger fields."
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READER COMMENT(S)
1. Upul Kulasinghe Feb 06
It is very rarely that an oil major will explore in a frontier area.

Most hydrocarbon plays were opened up by small independents. For example, the North Sea plays were opened by Hamilton Bros, a company unheard of until they brought in the Argyll Field. Unfortunately these have largely been swallowed up by the big boys.

As somebody who has been involved in upstream hydrocarbon operations for the past 30 yrs, it is hardly surprising that interest has been showed by independents only.

Anybody who expected any Major to bid was being unduly optimistic and completely unrealistic...but that is the level of ignorance of the upstream hydrocarbon business in Sri Lanka!