Oil Deposit

February 07, 2007 (LBO) — Sri Lanka has asked governments of India and China to make a 100 million dollar deposit each, for securing a block to explore oil off the shores of the island, a top official said. “Out of the eight identified oil blocks we have given one each to India and China on a ‘nomination basis’ due to the close friendship between the nations,” Petroleum Minister, A H M Fowzie said.

The deposit will be set off against future revenues, if these countries strike oil. They would also have to make another re-claimable payment.

“We have also asked them to make a 10 million dollar payment as security for securing the oil blocks without a competitive bidding process,” he said.

India’s state-run Oil and Natural Gas Corp (ONGC) has been awarded a block in the island’s northwestern Mannar basin, he said but did not say which Chinese company secured the other bid.

Sri Lanka last year paid 10.5 million dollars and bought the seismic surveys conducted by Norway’s TGS Nopec.

If oil explorations are successful, Sri Lanka might be able to produce oil within the next three years, Fowzie said.

The government has already advertised its exploration plans to fo