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Sri Lanka off-shore oil block re-offered for development

ECONOMYNEXT – Sri Lanka is calling offers to develop an off-shore oil block in the North West of the island where some gas-condensate discoveries have already been made.

Sri Lanka’s Petroleum Development Secretariat said it seeking expressions of interest to survey and develop the 2,924-sq km block.

Cairn India did seismic surveys and dug three wells, of which two showed evidence of petroleum.

However the firm did not develop the wells when oil prices collapsed after a global commodity and economic bubble fire by the US Federal Reserve burst, and the block was returned to Sri Lanka amid doubts about its commercial viability.

Cairn won the block in 2007 at the height of the last commodity bubble.

In the Mannar and Sri Lanka’s north oil exploration also happened in the 1970s, after the first oil shock and commodity bubble fired by the Fed, forcing the dollar off the gold standard.

Sri Lanka also saw some oil exploration in 1981, during the second oil shock and commodity bubble, which ended when Fed Governor Paul Volcker tightened policy and ended it, creating the so-called ‘great moderation’ period.

Sri Lanka is now offering the block at a time when oil prices are low. (Colombo/Feb12/2017)

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