Exxon, Total Study Sri Lanka Oil Reserves Ahead of Biggest Sale

oil     Exxon Mobil Corp. (XOM) and Total SA (FP) are among explorers reviewing Sri Lanka’s oil and natural gas reserves ahead of the biggest auction of blocks planned by a nation that imports all its crude.

Exxon Mobil, the world’s largest oil company by value, and Total, Europe’s third-largest, bought data related to the sale of 13 offshore fields, Saliya Wickramasuriya, director general at the Petroleum Resources Development Secretariat, said in an interview. Eni SpA (ENI), BP Plc (BP/) and India’s Oil & Natural Gas Corp. (ONGC) have enquired about the bids, which are scheduled to open at a meeting with potential investors in Houston on March 7 and end about five months later, he said.

“We’ve had quite a few people from Big Oil come by,” Colombo-based Wickramasuriya said in a Feb. 25 telephone interview. “We’ve had 20 companies that took our data, made repeat visits, or expressed interest in taking discussions further in the framework of the bid round.”

Global oil majors are being lured by prospects beyond the island’s famed white-sand beaches as the nation seeks to rebuild an economy ravaged by three decades of civil war. Sri Lanka, where conflict ended in 2009, is looking for technology to unlock the potential of the area neighboring India, where companies including Reliance Industries Ltd. (RIL) and BP are present.

“It’d be good for Sri Lanka to get the big conglomerates in the energy sector interested at the onset,” said Dushni Weerakoon, director at the Institute of Policy Studies in Colombo. “It’ll be a signal of confidence and an enormous economic relief as we are a heavy energy importer.”
Crude Importer

Sri Lanka, which doesn’t produce any oil or gas, imports all its crude oil requirements from nations including Saudi Arabia and Iran. The nation has identified 13 blocks off the northern and western coasts of Sri Lanka for the auction, including five in the Cauvery basin and eight in the Mannar. Two of the 13 may be withdrawn because of a lack of data, Wickramasuriya said.

Alan Jeffers, a spokesman for Irving, Texas-based Exxon didn’t reply to an e-mail seeking comment on the bidding. Total spokeswoman Anastasia Zhivulina and ONGC Chairman Sudhir Vasudeva declined to comment, as did an Eni spokesman, who couldn’t be named because of company policy.

“BP continuously evaluates and ranks new exploration access opportunities around the world,” spokesman Mark Salt said in an e-mail on Feb. 25.

Cairn India Ltd. (CAIR), which is producing oil at India’s largest onshore block, discovered gas in an offshore area in Sri Lanka’s Mannar basin last year, estimated by the government to hold 1 billion barrels of oil. That’s equal to about 18 percent of India’s proved oil reserves, according to BP data.
Gauge Potential

Cairn India started drilling a new well in the area this month, Chief Executive Office P. Elango said in a Feb. 20 interview. It needs to drill two or three more wells before it can gauge the potential of the reserves, Wickramasuriya said.

The Sri Lankan Cauvery basin is a geological extension of an area in India off the coast of Tamil Nadu state, Wickramasuriya said. Reliance announced a gas discovery in a deepwater well in the Indian waters of the basin in July 2007. Four years later, it announced another discovery in the area.

Loans from China’s Export-Import Bank and companies including China Merchants Holding International and China Machinery Engineering Corp. are helping Sri Lanka expand its ports, power generation, and transportation networks. Chinese oil explorers have yet to contact Wickramasuriya or his office for the latest auction, he said.

“Now that we’re launching the bid, some companies that have been interested internally may now start contacting us,” he said.


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