Sri Lanka’s planning of upstream petroleum development

Sri Lanka has some gas and oil deposits in the Mannar basin and this precious natural resource should be used for the benefit of Sri Lanka’s planning of upstream petroleum development, Power and Energy Minister Champika Ranawaka said.

Making the keynote address at the Ceylon Chamber of Commerce Forum on Energy Sector Development Strategies last morning he said that they are now evaluating the commercial viability of the discoveries and sectorial demand analysis for natural gas.

“Economic feasibility analysis and negotiating the price and other terms with a selected developer with the aim of signing a conditional gas purchase agreement is now in progress.” “We also feel that this endeavour will develop a domestic gas market and diversify our energy mix and lowering our generation cost.

It is also expected to increase the government revenue through taxes and royalty from the gas and oil deposits.”

There is a proposal to develop the Dorado field laying sub-sea facilities together with an onshore gas processing plant supported by a 55 km length 10 inch sub-sea pipe line to Norochcholai and from that point to erect a 150km onshore pipe line to Colombo in order to provide liquid fuel to 630 MW of CEB and private power plants and to other consumers.

According to a recent calculation that over the past 250 years two trillion tons of CO2 waste from fossil fuel generation has been dumped into the atmosphere with one trillion tons dumped during the last 35 years!

“If energy usage doubles as predicted another two trillion tons will be dumped before 2050 because of this excessive emission, stipulated carbon budget may exceed. That is 450 ppm on a 2 degrees centigrade threshold. This will definitely result in many climate change issues with grave repercussions for all of us. Therefore, while achieving our desired economic growth and development targets it is our duty to be extra careful in preserving our precious natural environment.” According to “Stora” report global economy will shrink by 5-10 % in 2100. It is envisaged Sri Lanka economy might shrink 1.2 % by 2050 and 6.5 % by 2100.”

A feasibility study is now been carried out to connect the Indian electricity grid and Sri Lankan electricity grid. “This is from Madurai in India to Anuradhapura in Sri Lanka thereby transferring power both ways depending on the demand and supply. This will consist of about 127 km marine section along the sea between Mannar and Panaikulam in India,” Power and Energy Minister Champika Ranawaka said.

Cairn India to pull out?

Government is looking for a new developer for the natural gas exploration Mannar Basin as has indicated that they do not wish to continue operations in Sri Lanka.

The Minister of Power and Energy, Patali Champika Ranawaka answering a question at the panel discussion, said that they are now looking at another developer.

The Cairn India management has also seen some management changes and the declining of oil prices is also speculated to be another reason for the anticipated exit of Cairn India from Sri Lanka and concentrate on their oil field in Rajasthan, India. Due to these factors and natural gas not found yet (though the indications are there) Mannar Basin gas production is not a priority for them.

Cairn made known their stance on the Mannar Basin gas during talks with the government in Colombo last month, industry sources said.

The quarterly financial report of the company which is expected to be out soon, is expected to give a clearer picture in this regard.