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Chevron, Indian Oil may bid to explore off Sri Lanka’s coast

Chevron, Indian Oil may bid to explore off Sri Lanka’s coast
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First Published: Fri, Apr 27 2007. 09 15 AM IST
Updated: Fri, Apr 27 2007. 09 15 AM IST
Anusha Ondaatjie, Bloomberg
Colombo: Chevron Corp., the second-largest U.S. oil company, and Indian Oil Corp. may bid for a license to explore off Sri Lanka’s western coast in a field the government says holds 1 billion barrels of crude oil.
Chevron is studying seismic data before deciding if it will compete for a permit, said Kishu Gomes, head of the company’s Sri Lankan unit. Indian Oil, the country’s biggest refiner, has told the government it may bid, said K. Ramakrishnan, managing director of local unit Lanka IOC Ltd.
Sri Lanka awarded an area each to state explorers from India and China and plans to seek bidders for three remaining sectors at an offshore technology conference in Houston on 1 May. The country wants to develop its first offshore field as surging crude oil prices and a weaker currency raised Sri Lanka’s oil import bill by 25% to $2.07 billion (Rs8,488 crore) last year.
“Chevron is interested in any energy sector opportunity in Sri Lanka and oil exploration is something we are looking at,” Gomes, managing director of unit Chevron Lubricants Lanka Ltd., said in a telephone interview. “We have to value this opportunity against so many others around the world.”
Chevron, based in San Ramon, California, is analyzing data compiled by Norway’s TGS-Nopec Geophysical Co., he said. India had oil reserves of 5.9 billion barrels at the end of 2005, according to BP Plc’s Statistical Review of World Energy.
Secure Supplies
Sri Lanka needs to secure its own petroleum supplies as costlier oil imports and military purchases to combat separatist Tamil Tiger rebels have accelerated consumer prices. The increase in the oil import bill also contributed to the South Asian nation’s balance of payments surplus dwindling to $193 million at the end of December, from $501 million at the end of 2005.
Demand for fuel is rising in line with economic growth, projected at 7.5% this year. Sri Lanka, which imports all its oil needs, purchases about 15 million barrels of crude each year, and buys a similar amount of oil products from abroad, according to central bank records.
China National Offshore Oil Corp., and Oil & Natural Gas Corp., state oil companies of China and India, have been promised two areas of the Mannar basin. The field contains the equivalent of 1 billion barrels of oil, Petroleum Minister A.H.M. Fowzie said 1 March.
The government plans to award licenses early next year, Neil De Silva, director general of petroleum resources development in Sri Lanka, said on 4 April. Bids will be open until early November, he said.
Sri Lanka received a grant of Rs51 million ($463,552) from the U.S. in March to help formulate a “production- oriented” regulatory structure.
China National Offshore Oil, based in Beijing, is the parent of overseas-listed Cnooc Ltd and may start exploration off the Sri Lankan coast by 2008, Fowzie said.
The Central Bank of Sri Lanka has maintained its 2007 growth forecast even as renewed fighting in the island’s civil war and the highest interest rates in Asia slowed the pace of expansion in the fourth quarter.
Fighting in the South Asian island nation escalated last year as two attempts at peace talks in Geneva failed to make progress toward ending the two-decade conflict with the Liberation Tigers of Tamil Eelam.
The rebels control parts of the island’s north and east. The exploration areas are off the northern coast of the island.
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First Published: Fri, Apr 27 2007. 09 15 AM IST
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