Energy Minister Udaya Gammanpila has made another blunder in oil exploration in the country and bungled the ongoing tender process in selecting a bidder for the Mannar Basin which was divided into nine exploration blocks ranging from 3,340 to 6,640 sq. km.
Minister Gammanpila has meddled with the country’s oil exploration procedure and prospects sometime back before finding himself stranded in political wilderness with his big talking but like an empty tin (hiss tin ekak wagei) within himself and left holding the can for the oil hike taking full responsibility for it claiming that there are no dollars in the country and economy is on the verge of crashing thereby sending wrong signals to international agencies like the IMF and the World Bank.
A decision was taken by the Government to recommence oil and gas exploration and also to attract more investors to the industry, Energy Minister Udaya Gammanpila told the media, adding that the country had already prepared a natural gas policy to attract more investors to explore for oil and gas in Sri Lanka.
Oil and gas exploration recommenced last year after three years and the Secretariat reopened the ex-Cairn M2 block in the Mannar Basin for development and commercialisation through a limited tender offer.
As of last year, Sri Lanka received three proposals from two consortium s and an operator based in the UK, South East Asia, and the Middle East.
According to the PRDS, the proposals were being evaluated by the project team and once done, would then be referred for recommendations to the Cabinet-Appointed Negotiation Committee (CANC).
Sri Lanka‘s oil and gas exploration process in the Mannar Basin including appraisal and development of natural gas discoveries in Block M2 is being dragged into unknown direction with the cancellation of international competitive bids called in 2019 removing the selected bidder.
This action has been taken by Energy Minister Udaya Gammanpila on the advice of newly appointed advisor to Petroleum Resources Development Secretariat (PRDS) Saliya Wickramasuriya.
The aim was to recommence oil and gas exploration and also to attract more investors to the industry.This move has further delayed exploration activities in Mannar basin which has the potential to generate over two billion barrels of oil and over nine trillion cubic feet of natural gas sufficient to fulfil a substantial portion of Sri Lanka’s energy needs for the next 60 years, several energy experts said.
In a letter to Presidential Secretary Dr. P.B. Jayasundera, Sealion Power, a consortium led by leading experts in the oil and gas industry in the UK noted that the PRDS Project Committee (PC), chaired by the Director General of the PRDS, formally recommended the Sealion Bid in 2019.
The recommendation from the PC is reviewed by the Cabinet Appointed Negotiating Committee (CANC). There was then a hiatus in the proceedings until, on 27th July 2020, a virtual meeting was held between Sealion and the CANC at which certain clarifications were requested in respect of the Sealion Bid.
These clarifications were made by letter dated 29th July 2020 and the formal endorsement by the CANC requires the final approval from the PC, the company stated.
After his appointment, Minister of Energy Udaya Gammanpila has convened a meeting on 11th November 2020 with members of the CANC in attendance.
At the meeting, new advisor to the Minister, Saliya Wickremasuriya noted that the Government should be attracting Top 10 or, worst case, Top 20 oil and gas companies from around the world to invest in the sector.
He told the meeting that Sealion does not fit into that category; selected bidder Sealion would abandon the process half-way through; and its technical operator, Nobel Oil, did not have any deep-water drilling experience.
He advised that he had submitted a report to the Minister strongly advising that the Minister cancel the process.
The Chair of the CANC, Anura Dissanayake, confirmed that he strongly recommended the award to Sealion. He reminded that none of the big companies had shown any interest, even during his tenure as DG from 2001 to 2017 when market conditions were much more positive.
Chaminda Hettiarachchi, Additional Secretary to the Ministry of Energy, said that due process had been followed and all parties had had sufficient time to submit their bids. He recorded that the members of Sealion had shown great perseverance in pursuing this project and, following the recommendation of the PC, they should be awarded the contract.
Professor Dhammika Thantrigoda (an online attendee) accepted that Sealion was not a top tier company but he had been a member of all committees appointed to evaluate proposals since 2007 and, at no time, had there been any success in attracting top tier companies to the Mannar Basin.
He affirmed that the Sealion bid contained a reasonable work programme and that the shareholder members of Sealion had reasonable technical and financial expertise and capabilities to warrant an award.
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