Monday 20 April 2015

Cairn India pulling out of fuel, gas explorations in Sri Lanka

Since Cairn India is reportedly to pull out of its offshore fuel and natural gas explorations within the Mannar Basin in Sri Lankan waters, it has been revealed that the government has been compelled to look for new entities to continue drilling these deposits.

According to reports, with increasing pressure on Cairn India due to the fall of fuel prices in the world market, it has decided that the offshore fuel exploration in the Mannar Basin of Sri Lanka is not a priority.

The company has instead decided to further strengthen its oil production from its fields in Rajasthan in India.

According to reports, the Sri Lankan government has not abandoned its efforts of commercially exploiting the natural gas deposits discovered by Cairn India within the Mannar Basin, it has begun negotiations to attract other entities for this process.

It is still not clear how Cairn India is to recover it investments already made for these fuel explorations.

Cairn Lanka, which is a subsidiary of Cairn India has reportedly not renewed its fuel storage facilities it has obtained from the Colombo port and this confirms that it is to pull out of fuel and natural gas explorations in Sri Lanka.

On 05 March Cairn India announced that it was taking steps to cut its costs since fuel prices were falling rapidly in the world market.

It has been further revealed that Cairn India is to pull out of fuel and natural gas explorations in Sri Lanka from next October.

When Cairn India began fuel and natural gas explorations in Sri Lanka, it was owned by Cairn Energy PLC of Scotland and later acquired by Vedanta Resources of India in 2010. Hence, Cairn India is currently a subsidiary of Vedanta Resources.

In July 2008 Sri Lanka entered into an agreement with Cairn India for fuel and natural gas exploration in one block of the Mannar Basin.

The extent of this block is 3,400 square kilometres, the government had allowed Cairn India to drill to a depth of between 200 to 1,800 metres.

A Norwegian company, TGS-NOPEC Geophysical Company discovered fuel deposits off the coasts of Mannar and following this the Sri Lankan government divided this area into eight blocks.

Petroleum Resources Development Secretariat (PRDS) responsible for fuel explorations in Sri Lanka and which was under the purview of the President during the tenure of the former government has been brought under the Ministry of Power and Energy by the new government.

Hence, Sri Lanka’s the responsibilities of Sri Lanka’s fuel and gas explorations have now come under Minister Patali Champika Ranawaka.
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