There is a 60 percent possibility that the Mannar Basin will have oil, said the Director General of Petroleum Resources Development Secretariat in a public lecture Wednesday.
"Oil exploration is a high-risk venture with a 10 percent success rate of finding oil, but things might be different in Mannar," Dr Neil De Silva said.
He said that oil exploration began in the ’70s and seven wells had been explored after 18,000 km of 2D seismic data of the Mannar basin was collected but no oil was found.
The technology was not very accurate and the wells were drilled in places that should not have been drilled but now with 3D seismic data a more accurate survey can be done and the chances that the Mannar Basin on the Sri Lankan side of the maritime border will contain oil has a probability rate 60 percent, Dr De Silva said. India is producing oil from wells discovered on its side.
The Mannar Basin was divided into eight blocks and the government decided to open three of them for bids, which closed on 31 January this year.
Block SL-2007-01-001 received bids from Cairn India, ONGC Videsh and Niko Resources. Block SL 2007-01-002 received two bids, Cairns India and Niko Resources while the third block SL 2007-01-003 received a bid from Niko Resources.
The government decided to evaluate the bids for SL 2007-01-001 only, as it felt that the other two blocks did not receive enough bids. He said that only the cabinet would know why such a decision was taken. The exploration contract is eight years in duration and is divided into several stages with each stage having certain requirements which need to be met in order to qualify for the subsequent stages.
Sri Lanka had road shows in London, Houston USA and Kuala Lumpur prior to calling for bids with many heavy weights in the field of oil-exploration expressing their enthusiasm. 5,000 emails, 200 faxes and 100 phone calls to top executives in oil exploration companies were made in order to market the bids. A total number of 42 companies had responded and showed interest in exploring for oil in the Mannar Basin.
"But we had several challenges. One was the security concerns and political uncertainty. But on a technical ground the slots were too small. They would have preferred to explore a wider area as it would naturally increase the chances of discovering oil.
"Oil exploration in the Mannar Basin will take place in relatively deep waters where a single well is estimated to cost US $30 million to drill (US $ 10 million in shallow waters) and oil exploration companies wanted to be able to conduct a more meaningful exploration and wanted a larger area.
"Sri Lanka continues to compete with countries such as India, Bangladesh, Africa and the Middle East to attract oil explorers and the disadvantage Sri Lanka had is that its competitors had proven that they did have oil deposits.
"We have a high country risk, the whole world knows the situation in the country. We have a marketing risk, an unproven basin with no oil. And there is the geographical risk, there is a 60 percent chance of finding oil in the Mannar Basin " Dr De Silva said.
According to historical data on existing offshore oil wells, commercial oil production is expected to begin by 2014, Dr De Silva said, if oil is found.
South America, Australia, Africa including Arabia, South Asia and Antarctica were once locked together in a single land mass about 550-500 million years ago called Gondwanaland and these regions today have oil reserves and since Sri Lanka shares its geographical history, Dr De Silva believes that Sri Lanka too could have oil resources.
