Sri Lanka Strengthens Bilateral ties with Norway in the Petroleum and Energy Sector

19-10-2020

The Ambassador, H.E. Godfrey Cooray met the Minister of Petroleum and Energy of Norway, Hon. Ms. Tina Bru at the Norwegian Ministry of Petroleum and Energy on 16th October 2020. Assistant Director General, Ms. Jorunn Anne Salthella, and Assistant Director General Mr. Jan Øivind Johansen of the Climate, Industry and Technology Department of the Norwegian Ministry of Petroleum and Energy attended the meeting. Ambassador was accompanied the meeting by Second Secretary Mrs. Samanamli Atalugama and Attaché, Mr. A.M.T. Subaraj.

Hon. Tina Bru and the senior officials of the Ministry of Petroleum and Energy have warmly welcomed the Sri Lanka Delegation headed by H.E. Godfrey Cooray, the Ambassador. Hon. Minister has congratulated the Ambassador on his appointment as the Ambassador of Sri Lanka to Norway, Finland and Iceland.

Ambassador H.E. Cooray thanked the Norwegian Delegation for giving the opportunity and informed that he had a preliminary discussion with the Minister of Power and Renewable Energy of Sri Lanka, Hon. Udaya Gammanpila with regard to the matters to be discussed with his counterpart.

H.E. Cooray further has given a brief description of the history of the oil exploration and Petroleum industry in Norway. Norway’s petroleum era started more than 50 years ago, and a number of the early fields are still producing. The first fields to be developed were in the North Sea, and the industry has gradually expanded northwards into the Norwegian Sea and the Barents Sea.

At the end of the 1950s, very few people believed that there were rich oil and gas deposits to be discovered on the Norwegian continental shelf. The Geological Survey of Norway even wrote to the Ministry of Foreign Affairs in 1958 stating that the possibility of finding coal, oil or sulphur on the continental shelf off the Norwegian coast could be discounted. But the discovery of the Groningen gas field in the Netherlands in 1959 opened people’s eyes to the prospect that there could be hydrocarbons under the North Sea.

In October 1962, Phillips Petroleum sent an application to the Norwegian authorities requesting permission for exploration activities in the North Sea. The company asked for a licence for the parts of the North Sea that were in Norwegian territorial waters and that were or might be designated as part of the Norwegian continental shelf, and offered USD 160 000 per month. This was regarded as an attempt by the company to obtain exclusive rights. The authorities decided that it was out of the question to hand over the entire continental shelf to one company. If these areas were to be opened for exploration, more companies would need to be involved.

Further, H.E. Cooray highlighted that Petroleum exploration in Sri Lanka began approximately 40 years ago in late 1960s. Refreshing the oil and gas exploration work, 2D seismic surveys were conducted in Mannar basin by TGS NOPEC, a Norwegian seismic contractor with a regional office in Perth, Australia in 2001 and 2005.

Ambassador has also conveyed that the first international licensing round was held in 2007 for three exploration blocks (M1, M2 and M3) in 2007 and one exploration block was awarded to Cairn Lanka Pvt Ltd, subsidiary of Cairn India in 2008.

For the first time, two natural gas discoveries were made in two wells out of the three wells drilled in Block M2 by Cairn in 2011.

Ambassador stated that Sri Lanka will become a country which produces natural gas during 2024- 2025, and it will transform the country’s energy mix subjected to securing potential investors by 2020. [1].

Sri Lanka’s Petroleum Resources Development Secretariat (PRDS) with the assistance of regional experts has estimated that the Mannar basin alone could have has the potential to generate over two billion barrels of oil and over nine trillion cubic feet of natural gas(9 TCF), which would be sufficient to fulfil a substantial portion of Sri Lanka’s energy needs for the next 60 years.

PRDS was planning to call bids for the next major licensing round, for exploration and development work in the remaining blocks in Mannar and Cauvery basins after legislating the National Policy on Natural Gas (NPNG) in 2019 with an aim to drill natural gas before 2025.

Sri Lanka’s government has called for international competitive bids in 2019 for exploration and development activities in Blocks M1, M2 and C1, in Mannar and Cauvery Basins including appraisal and development of natural gas discoveries in Block M2.

Ambassador further revealed that the Sri Lankan Government signed an agreement with two energy companies in Norway and France at the Ministry of Petroleum Resources Development in 2019 to carry out a two-year oil and gas exploration exercise in the Eastern seas.

H.E. Cooray said that Sri Lanka will be an oil and natural gas producer by the year 2022 and noted that country has already entered into a study contract signed in 2016 with the two companies to explore the J5 and J6 blocks. Total has already surveyed 50,000 square kilometres on the East Coast as part of a previous study and Equinor will have a 30 per cent stake in the exploration as per the new agreement. He further said that the studies carried out thus far and data gathered from a previous seismic survey resulted in a positive outcome.