Sri Lanka Needs to Create Domestic Demand to Make Gas Exploration Worthwhile

Sri Lanka needs to find proactive ways of commercialising indigenous offshore gas reserves if the country is to deliver natural gas at a competitive price, Petroleum Resources Development Secretariat Director General Saliya Wickramasuriya said.

There is no shortage of natural gas, Wickramasuriya stated, adding Sri Lanka would have all the access to natural gas it could possibly want but it wouldn’t have anywhere to put it, reported local newspaper Daily News.

“The market around us is depressed at the moment,” he said.

He was speaking at an event organised by American Chamber of Commerce (AmCham) Sri Lanka.

Wickramasuriya said that the country to understand the economic impact it will have on society. “If we try to maximize the demand for natural gas, then the cost per unit will drop.”

Last week, Wickramasuriya told Lanka Business Online, a news portal, that there is a compelling case to initially start gasifying Sri Lanka using imported LNG and then move towards using domestic gas. He added that this move will also help the economy move away from coal. 

Sri Lanka has gas deposits off its eastern and western coasts. In February, French energy major Total signed an agreement with government of Sri Lanka to explore two ultra-deep water blocks off the east coast. The duration of this agreement includes a period of two years from the effective date for data acquisition and for processing and interpretation.

Last year, Cairn India which struck gas in Mannar Basin decided not to go ahead with further exploration. In July 2008, the government of Sri Lanka and Cairn India signed an agreement for exploration licence permitting Cairn India to explore oil and natural gas in Mannar Basin. The Block SL 2007-01-001, which is in offshore northwest Sri Lanka and covers approximately 3,000 Km2 in water depths of 200 to 1,800m, was awarded to Cairn India through a bid round held in 2008.