September 03, 2007 (LBO) – Sri Lanka is tendering three off-shore oil exploration blocks in October and exploration firms are expected to begin work in 2008, petroleum minister A H M Fowzie said. Sri Lanka has identified eight off-shore exploration blocks in the north eastern Mannar basin of which two had been reserved for China and India. The balance three blocks would be sold once the first three blocks start pumping oil hopefully by 2010, Fowzie said.
The Mannar area is estimated to have deposits of one billion barrels of oil, the head of the petroleum exploration secretariat, Neil de Silva said.
Winning bidders would have to put down a signature bonus immediately and a production bonus after hitting oil.
The companies would have to pay 10 percent royalty on oil sales, 35 percent income tax on profits and put forward a profit share scheme with the government. The profit share scheme as well as the signature and production bonuses would determine the winning bids.
The winners would also have to give a Sri Lanka state oil exploration investment firm the chance to buy into a 10 percent stake in the oil company incorporated to produce oil, Fowzie said.
Sri Lanka would be h