Sri Lanka discovers gas looks forward to oil

Oct 02, 2011

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Natural gas deposits have been discovered for the first time in Sri Lanka's history by the Lankan arm of Cairn India, President Mahinda Rajapaksa announced on Sunday.

"I have been informed that a gas deposit has been found as a result of our oil exploration work", Rajapaksa told a political gathering in the central town of Kandy.

"With more luck and blessings we hope we can find oil", Rajapaksa said.

Cairn Lanka, a fully owned unit of Cairn India, said it has struck natural gas reserves in the very first well it drilled in the offshore Mannar basin of Sri Lanka.

"Cairn Lanka (Pvt) Ltd, a wholly owned subsidiary of Cairn India, has notified the appropriate authorities in the government of Sri Lanka of a gas discovery in the CLPL-Dorado-91H/1z well, drilled in a water depth of 1,354 metres, located in the block SL 2007-01-001, Mannar Basin, Sri Lanka," the company said in a press release in New Delhi.

Cairn had spud the well in early August and natural gas was discovered a few days back. "A gross 25 metres hydrocarbon column" was tested, it said.

"Further drilling will be required to establish the commerciality of the discovery," it added.

CLPL-Dorado-91H/1z well is the first well to be drilled in Sri Lanka in 30 years and the first well to discover hydrocarbons in the country. Bombay Stock Exchange (BSE)-listed Cairn had in 2004 made India's biggest oil discovery in more than two decades in Rajasthan.

It is currently producing 125,000 barrels of oil per day from the Mangala oilfield in Rajasthan. Cairn India is the target of a $ 9 billion takeover by London-listed mining group Vedanta Resources.

Vedanta is buying 40 per cent of UK-based Cairn Energy Plc's stake in Cairn India. The Sri Lanka block is the only overseas property Cairn India current has. It has 10 oil and gas blocks in India.

The Mannar basin in Sri Lanka is a frontier petroleum province that is yet to be fully explored. Block SL 2007-01-001 was awarded to Cairn in a 2008 Sri Lanka bid round. Cairn Lanka (Private) Limited is a wholly owned subsidiary of Cairn India and holds a 100 per cent participating interest in the Mannar block.

Cairn Lanka acquired 1,750 square kilometres of 3D seismic data in the Mannar Basin of Sri Lanka between December, 2009, and January, 2010. Based on interpretation of the 3D seismic data, several prospects and leads have been identified.

Cairn will drill three wells in the block using drillship 'Chikyu'. The drilling campaign will cost $110 million.

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