Chairman of the Petroleum Development Authority of Sri Lanka, Mr. Saliya Wickramasuriya, has detailed that the prospect of extracting petroleum and natural gas from Mannar basin have significantly improved over the last two years, placing it on the radar of internal oil majors.
The statement comes amidst Sri Lanka’s worst economic crisis, which has seen severe shortages in basic necessities in essential goods such as food, medicine and fuel. On Monday, Energy Minister Kanchana Wijesekera declared that fuel distribution across the island would be restricted for 12 months because of Sri Lanka’s scant foreign exchange reserves.
Experts within the industry however note that the current infrastructure is insufficient:
“Cairn India has invested nearly $200 million in Sri Lanka, but it would require an investment of over $1 billion to build production infrastructure. Therefore, it is vital to urgently attract as many investors as possible for exploration and production to maximize benefits to Sri Lanka – especially in light of the global energy crisis and the concomitant energy price increases which has enhanced investor appetite” the Island LK reports.
Estimates over this vary with other sources indicating that Cairn has invested $250 million and estimating the cost to be around $500 million to produce a small quantity. Whilst it is not possible to ascertain the quantity of resources without drilling, seismic studies estimate 9 TCF of gas and several billion barrels of oil.
“These volumes could fulfill several decades of the country’s energy needs while potentially saving $6-7 billion p.a. in expenditure on energy” the Island LK states.
Even if investments are successful, the recent crisis has raised concerns over the distribution of fuel. Al Jazeera has noted reports of wealthy and powerful individuals bypassing the queues for fuel in Sri Lanka.
Ravina Shamdasani, a spokesperson for the UN High Commissioner for Human Rights, has also noted confrontations between those queuing for fuel and Sri Lanka’s security forces.
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