Scurried pact for oil off Mannaar

[TamilNet, Monday, 07 July 2008, 13:22 GMT]
Cairn India, a subsidiary of Cairn UK Holdings Limited, on Monday signed a Petroleum Resources agreement to explore for oil and natural gas in the Mannaar Basin. The signing took place in front of Sri Lankan President Mahinda Rajapaksa at Temple Trees between the Sri Lankan Minister for Petroleum and Petroleum Development Resources A.H.M Fowzie and the Chief Financial Officer (CFO) and Executive Director of the Cairn India, Indrajit Banerjee, who gave USD one million as signature bond to Rajapaksa government, according to informed sources.

Observers say that the pact, which was originally scheduled to be signed on the 10th, was rushed through, fearing reprisals from the JVP, which has already announced a trade union protest against Rajapaksa government.

"This is a pact for blood in land and oil in sea," commented a Colombo based observer.

Announcing the signing of the agreement, Mr. Indrajit Bnerjee said: “Cairn India is delighted to be awarded the exploration licence by the Government of Sri Lanka. The Mannar basin has not been explored in Sri Lankan waters and as such represents a frontier petroleum province.”

"I hasten to add that along with the success we have experienced, oil and gas exploration is a risk business and success is not always guaranteed."

According to a press statement by the Cairn, the exploration block (Block SL 2007-01-001), which is offshore North West Sri Lanka and covers approximately 3,000 Km2 in water depths of 200 metres to 1800 metres was awarded to Cairn India in the recent Sri Lanka bid round. However, informed source said that the agreement has been landed without tenders.

The work programme includes proposals to acquire 5,000 kilometres (km) of 2D, 1,000 km2 of 3D seismic and drill three wells in the initial three years of the eight year exploration period, according to Cairn.

The exploration would begin within 6 months, according to informed sources.

Cairn Lanka (Private) Limited, a wholly owned subsidiary of Cairn India has been formed which would hold a 100% participating interest in the block.

Expressing gratitude for the support he received from the Sri Lankan president, Mr. Banerjee said that Cairn India was delighted to be the first company to be awarded an exploration license by the GoSL.

Cairn along with its joint venture partners has invested billions of dollars in a variety of projects and developments in South Asia.

Cairn India Limited, a subsidiary of Carin UK Holdings Ltd, engages in the exploration, development, production, and sale of oil and gas in India. According to Business Week, the company, as of May 13, 2008, had exploration and appraisal interests in 14 blocks. Its oil and gas fields are located in Barmer, Ravva, and Cambay Basin, India. The company was incorporated in 2006 and is headquartered in Gurgaon, India with additional offices in Chennai, Gujarat, Andhra Pradesh, and Rajasthan.

It was listed on 9 January 2007 on the Bombay and National Stock Exchanges.

The Initial Public Offering (IPO) of Cairn India was the largest IPO to date in the Indian primary equity markets and Cairn India currently has a market capitalisation in excess of $5 billion, ranking as the fourth largest oil and gas company in India.

Indrajit Banerjee joined the board of directors of Cairn India on 26 Feb 2007 and was appointed as Chief Financial Officer (CFO) with effect from 1 March 2007.