EconomyNext – Cairn India has hinted at difficulties in starting natural gas production from Sri Lanka’s offshore Mannar Basin with more seismic data processing planned to further refine the block’s potential.
The company, releasing its results for the third quarter ended 31st December, 2014, has spoken of "challenges" in starting gas production, an apparent reference to long-drawn talks with Sri Lanka on agreeing on a price and how to sell the gas.
"Commercialization of the gas discoveries made on the block continues to present challenges," the company said in a statement.
"The company is refining the technical evaluation of the remaining exploration prospects on the block that could ultimately add to the discovered resource base," it said.
"Toward that end, Cairn plans to commence 3D seismic reprocessing in the current quarter to further investigate the potential."
Cairns’ statement did not say what the challenges were in starting Mannar Basin gas production.
Months have passed since its last announcement that it was working to commercialise the discovery with talks with the former regime of ousted president Mahinda Rajapaksa.
The previous government had delayed approving a natural gas policy that would have spelt out how gas produced by Cairn would be sold and at what price and how profits would be shared between the two.
Government officials have said the Mannar Basin gas deposits could be used initially for thermal power plants and later for other uses like transport and making fertiliser.