The new administration has taken a major step towards oil exploration in the Mannar basin by advertising identified plots for further studies on oil exploration based on the research concluded in the area last year.

It is planning to undertake a feasibility study on oil exploration in the Mannar Basin, a shallow bay part of the Laccadive Sea in the Indian Ocean, which has about 5 trillion cubic feet of natural gas, enough to meet the energy needs of the island nation for the next six decades, a media report has said.

A natural gas field was reportedly discovered for the first time in 2011, but the country has not yet capitalised on this treasure trove, which could potentially solve Sri Lanka’s energy requirements, official sources said.

Sri Lanka will auction an oil block in the Mannar basin where traces of natural gas had already been found in early 2022, Energy Ministry said.

Cairn Lanka, a unit of Cairn India, found the presence of natural gas in two exploration wells labelled Dorado and Barracuda, but did not declare a commercial discovery to develop. LNG prices at the time were lower than now. Sri Lanka was also working with Schlumberger, an oil and gas services company, to re-analyze M2 oil exploration data.

“This is at no cost to the government,” the Ministry said. The petroleum exploration office had engaged an experienced consultant to prepare a feasibility report on the Dorado well.

The Dorado-91H/1z well was drilled to 4741 metres and had found 24 metres of hydrocarbon-bearing Cretaceous sandstone in three zones between the depths of 4067 metres and 4206 metres.

They were said to be gas bearing with some liquid hydrocarbon potential. Barracuda-1G/1 was drilled to a depth of 4741 metres and had fond 24 metres of hydrocarbon-bearing Cretaceous sandstone in three zones between the depths of 4067 metres and 4206 metres.

The reservoirs are mostly gas-bearing with some additional liquid hydrocarbon potential.

Power and Energy Minister Kanchana Wijesekera announced that the Petroleum Resources Development Secretariat (PRDS) would soon advertise the identified plots in Mannar basin for exploration activities.

According to PRDS, there were estimated 5 billion barrels of fuel and about 5 trillion cubic feet of natural gas in the Mannar basin.

It is sufficient to meet the country’s fuel requirement for about 60 years, and which could be utilised to increase the country’s power supply to 1130 kilowatts.

The natural gas production alone is estimated to bring approximately US$ 200 billion to the country in various sectors within a span of 25 years.

Although, there’s a possibility of finding economically viable deposits, Wijesekera noted that no assurance could be given in that regard.

Despite calling for proposals multiple times, PRDS is yet to find a reliable investor for the identified petroleum plots in the Mannar basin.

Editor’s note:
China and Sri Lanka have long maintained a close relationship of mutual support and understanding, regardless of how the international situation changes. In recent years, the two countries have seen steady development in bilateral economic and trade cooperation, especially under the Belt and Road Initiative (BRI). However, since Sri Lanka fell into an economic crisis, some Western forces have been seeking to undercut China-Sri Lanka bilateral ties with the “debt trap” and other narratives. In an exclusive interview with the Global Times (GT), Sri Lanka’s Ambassador to China Palitha Kohona (Kohona) debunked such narratives and talked about China’s assistances to his country during such a difficult time and future bilateral cooperation. 

GT: News coverage of Sri Lanka’s economic crisis has attracted global attention. And the government previously said that the crisis would last at least two more years. How serious is the current situation in Sri Lanka? What does the country need the most at the moment? What are the main reasons for the crisis?

Kohona: Sri Lanka is confronting an unprecedented crisis at present. International media have given this crisis a wide coverage, including in China. The current situation in Sri Lanka has been precipitated largely by the COVID-19 pandemic, which has negatively impacted many other countries. 

The pandemic resulted in shrinking Sri Lanka’s tourism industry substantially, which had been contributing 12-15 percent of the national income. It also resulted in the contraction of our export markets, mainly in Western countries and China. Over 60 percent of our garment production was exported to Europe and the US. The Pandemic also caused a reduction of the remittances of Sri Lankan workers abroad. These were compounded by inflation and shortages of fuel, cooking gas, food and medicines, which are sourced from abroad.  

This cocktail of negative factors resulted in widespread disenchantment, which in turn gave rise to a raucous demand for the resignation of the government, including the President. In the last two weeks, the prime minister and the government have resigned and a new prime minister and a cabinet have been appointed. We hope that the situation will return to normalcy quickly.

At the moment, the country critically needs petrol, diesel, cooking gas, food items and medicines. Speeding up the renewable energy program of the government will assist substantially to address energy shortages, and the renewable energy targets of the government.

GT: In terms of emergency financial assistance from the IMF, how much does the Sri Lankan government need to overcome current difficulties? In what areas the assistance will be used?

Kohona: Sri Lanka has approached the IMF for relief and discussions have commenced. It’s difficult to say how much by way of international funding will be required by Sri Lanka. The figure of at least $5 billion has been mentioned. Immediately, Sri Lanka needs funding to cover essential imports and to meet its debt repayment commitments. China, being a key member of the IMF, will be significant factor in Sri Lanka’s approach to the IMF.

GT: The China International Development Cooperation Agency vowed in April to offer emergency humanitarian assistance to Sri Lanka. What kind of assistance will the agency provide? What is your assessment of the significance of China’s assistance to Sri Lanka?

Kohona: The China International Development Corporation Agency (CIDCA) has offered 500 million yuan as emergency assistance. The proposed items to be covered by this package will include diesel, fertilizer, food and medicine. All Sri Lankans are grateful for this offer. We hope that larger amounts will be forthcoming given severity and urgency of the problem. The CIDCA has become a major player in South-South Cooperation and we look forward to working with the CIDCA in addressing our crisis.

GT: Some Western media outlets said that Sri Lanka has been caught in a “debt trap” by China. What is your response to such claims?

Kohona: The new Prime Minister Ranil Wickramasinghe has expressed his gratitude to China for the offer of assistance. China has always come to Sri Lanka’s aid in times of need and this is undoubtedly one of those times. China stood by us when Sri Lanka was threatened by a blood thirsty terrorist group and later when the epidemic threatened to spin out of control. Today, thanks to Chinese assistance, the pandemic is substantially under control. China also made the key contribution when we were seeking to recover economically after the terrorists were defeated. We are confronting an existential threat to the state now. We need China’s helping hand. The prime minister is likely to reach out to China again.

With regard to the claims of Chinese “Debt Trap Diplomacy,” one needs to distinguish between self-serving propaganda and reality. Only around 10 percent of Sri Lanka’s external debt is owed to China. The rest is owed to other bilateral donors, international financial institutions and multinational agencies. In the circumstance, if there is a trap, one cannot say that it was China which set the trap. Chinese loans were obtained at concessional rates. It is to be remembered that it was Sri Lanka which approached China for funding assistance to develop its infrastructure. In any event the current crisis did not result from a commitment to pay back money owed to China.

GT: Sri Lanka is a popular place, attracting hundreds of thousands of Chinese people working and studying there. What will the Sri Lankan government do to protect their safety amid the current turmoil?

Kohona: It is true that a large number of Chinese people are living, working, and studying in Sri Lanka. There is no threat posed to them. The Chinese workers are contributing to build up Sri Lanka’s infrastructure. It is also to be remembered that no foreigner has been harmed during the current unrest. It is unlikely that foreigners, including the Chinese, will come under any threat.

GT: China’s investment in Sri Lanka has seen rapid growth in recent years. According to China’s Ministry of Commerce, the value of newly signed engineering contracts by Chinese enterprises in Sri Lanka was $3.73 billion in 2021, a year-on-year increase of 257.2 percent. How do you view China’s investment in the country? What will the Sri Lankan government do to keep Chinese assets and projects in the country safe?

Kohona: Chinese funded projects have contributed significantly to Sri Lanka’s economic development. Among others, Chinese funding helped us to build the Katunayake Expressway, the Southern Expressway, Outer circular Highway, the Lak Vijaya Power Plant, etc. If not for the current financial crisis, precipitated largely by external factors, infrastructure development in Sri Lanka would have progressed further. The Hambantota Harbor, which was criticized at the beginning, is now experiencing considerable growth in cargo volumes. 

A number of Industrial projects have commenced in the Hambantota Industrial Processing Zone, including the manufacture of tyres, yachts, cement and steel. A major Chinese steel manufacturer has expressed interest in establishing a plant in Hambantota. If not for the current unrest in and around Colombo, a number of large companies had committed to begin investing in the Colombo Port City. 

None of the Chinese funded development projects have come under threat. It is acknowledged that FDI will bring much needed economic advantages, as well as foreign exchange to Sri Lanka. The country desperately needs the infusion of large quantities of foreign exchange.

GT: Some Western media outlets said that China’s investment in the Colombo Port City and Hambantota Port projects has “eroded” Sri Lanka’s sovereignty. What are your thoughts on this?

Kohona: It is simple propaganda used by interested parties to paint Chinese investments in the Colombo Port City and the Hambantota Port in a negative light and as having eroded Sri Lanka’s sovereignty. We must separate the mischief making propaganda from reality. These projects will make a valuable contribution to Sri Lanka’s economic development. They have in no way eroded Sri Lanka’s sovereignty. Sri Lanka maintains complete control over the developments.

GT: Sri Lanka suspended a China-invested power plant project a month ago, and it is reported that the project has been awarded to India. What is your response to those media reports, and how will China-invested projects being carried out in Sri Lanka?

Kohona: The projects which were suspended were extremely small and limited to three tiny islands in the North. I do not believe that the companies involved would have even felt the impact of the projects Beijing awarded to someone else. It is the people of those islands who will miss access to cheap electricity. It is important to remember that Sri Lanka needs investments, particularly into larger projects and in renewable energy.

GT: On May 8, the Sri Lankan Ministry of Finance announced that the AIIB will consider providing Sri Lanka with $100 million in emergency assistance. Can you tell us more about that? How helpful do you think AIIB’s assistance will be in solving Sri Lanka’s current debt problem?

Kohona: The AIIB repurposed an existing loan for emergency medical supplies. The medical supplies are required urgently. The Embassy has very close relations with the AIIB and their ready willingness to assist us is appreciated very much. But we require much bigger infusions of aid and investments at the moment. We will continue to talk to the AIIB, specially for assistance in the renewable energy area. Sri Lanka has a target of converting 70 percent of its energy needs to renewable energy by 2030.  Not only is this important in our efforts to meet the challenge of climate change, it will also make tremendous economic sense, given the drain on our financial resources caused by the reliance on imported fossil fuel.

GT: In recent years, China and Sri Lanka have cooperated closely. Chinese-funded enterprises have carried out many projects in Sri Lanka, including BRI projects. Will the current situation in Sri Lanka affect the China-Sri Lanka cooperation projects? 

Kohona: It is highly unlikely that the current tensions will affect the Chinese funded projects in Sri Lanka, the investments or the personnel involvement in those projects.  The government of Sri Lanka has endorsed the BRI and looks for Chinese investments to assist us in our efforts to develop rapidly.

The BRI will result in the investment of $4-8 trillion to build a region of shared prosperity. Sri Lanka certainly hopes that it will be a part of this region of shared prosperity. The current crisis will only be temporary and, with friends like China extending a helping hand, Sri Lanka will recover sooner than later.

GLOBAL TIMES

The Prime Minister met with representatives of the agriculture sector today (27) to discuss the food shortage in the country.

During the discussion, the Prime Minister stated that US $ 600 million is required to ensure an adequate supply of fertilizer. The officials then informed that if the banks issue dollars, the fertilizer companies will be able to supply the required amount of fertilizer.

The Prime Minister also explained that a new bill called the Essential Agriculture Supply Act will be introduced in Parliament to ensure the continuous supply and distribution of agricultural commodities.

He stated that the world is facing a shortage of wheat and fertilizer due to the ongoing war in Ukraine.

He explained that as the deficit increased, Sri Lanka’s food supply would deteriorate if immediate remedial action was not taken.

The Prime Minister instructed the officials to identify cultivable utility lands in urban areas. He said the country was in a dangerous situation and a concerted effort was needed to recover.

The ousted Finance minister Basil Rajapakse has mounted a massive campaign to prevent the 21 st amendment seeing the light of day. His mouth piece Sagara Kariyawasam who blindly supports the disposed former minister, who is largely responsible for destroying his once popular brother Mahinda Rajapakse and their family name, does all the speaking on behalf of Basil Rajapakse .  

Basil must know that the IMF managing director kristalina has gone on record,  something top global Diplomats won’t do by clearly pinning the economic crisis on mismanagement of the Rajapakses. What more?Basil Rajapakse was the finance minister. Until he was forced out few weeks ago. Basil must know the next time people get on to the streets neither he or his family members will be able to stay in Sri Lanka.

They will be driven away from Sri Lanka. He must count his lucky stars that he did not have to run away like Mahinda Rajapakse and hide. Basil according to sources has launched a protests campaign against PM Ranil Wickramasinghe who is fully committed to usher in the changes to the executive presidency and abolish the 20 th amendment. If Basil has an iota of intelligence he will go to the USA whilst the environment has got better for him to come out in public .

Without further risking the ire of the public. His attempt to undermine the government will destroy the economy that has already been destroyed by the likes of him and PB Jayasundara. Basil Rajapakse may think that the Sri Lankan public is stupid for him to continue to play his game.

He is certainly risking what ever little that is left of the Rajapakses and the country. He will never be forgiven if he destroys the last ounce of the economy in the name power and greed. He will not be able to even hide in the USA.

Adolf