COLOMBO (EconomyNext) – Sri Lanka will set up a national oil company and look for another partner to drill offshore natural gas deposits with the withdrawal of Cairn, Power and Energy Minister Patali Champika Ranawaka said.
The new government has take a policy decision to exploit the gas reserves found by Cairn in the Mannar Basin to pump it ashore at Kerawalapitiya on the north-west coast to initially feed government and private power stations, he said.
"We will form a national oil company and find a suitable partner to get this gas to Kerawalapitiya," he told a form on energy organized by Ceylon Chamber of Commerce Monday.
"That’s our ambitious plan."
Cairn has told the Sri Lankan government they were scaling back exploration worldwide and might not extend their concession on the block in the Mannar Basin, Saliya Wickramasuriya, Director General of the Petroleum Resources Development Secretariat said.
"They (Cairn) indicated to us they may not extend their concession after October although they have not told us anything formally," he told the forum.
"They told us they are pulling out of exploration activity worldwide, not just in Sri Lanka, but in South Africa too."
"It is not a matter of Sri Lanka’s policy (on petroleum) but that their (Cairn’s) own priorities have changed," Wickramasuriya said.
Cairn India today is not the same company as when it did the exploration, being then owned by a British firm that was a pure exploration company. Since then the company has been sold to an Indian mining group, Vedanta Resources, Wickramasuriya said.
"Also Cairn has been seriously affected by the oil price slump," he added, noting that the firm was trying to maximize revenue from oil sales to the Indian government from their fields such as in Rajasthan in India and had changed, being no longer a mainly exploration firm.
Ranawaka said the new government’s national energy plan unveiled last week aims to achieve energy self-sufficiency by 2025.
Ranawaka said the local private sector could also engage in the risky business of exploration which if successful could yield high returns as well.
"If the private sectors invests and explores, despite the huge risks, in the Mannar and Cauvery basins and off eastern Sri Lanka.
"There are 20 blocks. You can be the next Asian Rockefeller or Rothschild.
"We’re trying to find a suitable partner to explore these deposits and to achieve self-sufficiency in oil and gas."