In the course of an absorbing session during the Sri Lanka Ports, Trade and Logistics conference, organised by Seatrade in Colombo, representatives of international exploration and production outfits, and prominent members of the local shipping community, exchanged thoughts and ideas on the potential of offshore energy development and production in the island nation.
At the end of the opening round of bidding in February last year, three wells were drilled, and two were found to be lucrative. The project generated plenty of work for local companies.
With the likelihood of substantial hydrocarbon discoveries in the acreage currently on offer in the second round of global bidding for eight offshore exploration blocks, it would open up an even bigger bonanza for them.
“An area that we would like to expand or diversify into is to provide logistics services to the oil and gas sector, with Sri Lanka’s oil exploration projects that are to expand in the coming months,” said Prudential Shipping’s managing director Rohitha Mendis.
It was in early-February this year that a notice of bidding for eight offshore blocks was sent out by the country’s Petroleum Resources Development Secretariat (PRDS) to over 4,000 oil and gas decision-makers on the bid consultant IHS’s global CERA Alert mailing list. Roadshows then took place in March in Houston, London and Singapore. The discoveries made by Cairn in the Mannar Basin boosted industry interest in the offer, which included unlicensed offshore acreage.
Of the eight blocks on offer, those in the Cauvery basin range in size from 2,403 sq km in the shallow waters of the Palk Strait between Sri Lanka and India, to 4,566 sq km in deepwater areas to the north of Sri Lanka. The blocks in the Mannar Basin are larger, ranging in size from 2,714 sq km to 8,120 sq km in the very deep waters of the Gulf of Mannar.
Although there have been no oil and gas discoveries in the Sri Lankan sector of the Cauvery basin, the Indian sector of the basin has significant oil and gas fields.
The nearest discovery to the Sri Lankan sector is PH-9-1, located a mere 30 km from the Sri Lanka-India maritime border. The fields and discoveries in the Indian sector have confirmed that the Cauvery basin has an active petroleum system.
“Sri Lanka is currently in a stronger position to be a major player on the international shipping and logistics scene than it ever was,” said Saliya Senanayake, managing director of Lanka Shipping & Logistics.
“The country has always had a locational advantage, and it also had the vision on how to exploit it. Its smallness, rather than being a disadvantage, has been turned into an advantage, since there is much less red tape than there is in a vast country like India, which has inhibited the growth of its shipping industry.”
The offshore industry has huge potential for bunkering, changes of crew and armed guards, and for various other activities. Some of the local companies represent the world’s largest ship management companies who would have requirements for supply services, crew changes and anti-piracy services.
“When the oil companies start work, there will be several shipping and marine logistics related activities for local companies,” said Rohan De Silva, managing director of MacLarens Shipping, the largest and most diversified agency house on the island.
“There are so many areas where local companies can be of use – like conducting surveys, collecting data. One can partner with companies that are doing aerial seismic surveys. Once the oil and gas come, there will be a lot of work, including crew changes, food, supplies, spares, engineering items, tugs and bunker barges.”
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