Securing our national wealth

Yesterday’s special report in the Daily FT on the oil issue in Sri Lanka had detailed stories on how oil prices rising was going to be a threat to the country’s economic recovery.  The Petroleum Minister had also been interviewed, to comment on the domestic situation.

Chief of the International Economics Agency, Fatih Birol was quoted as saying “a rising oil price represents a wealth transfer from oil importing to exporting countries. This will have an impact on the balance of payments for countries.”

Meanwhile, there were reports which said that there were only little changes in oil prices last week, as the markets waited for further developments in the various Middle Eastern uprisings and the outcome of Japanese efforts to control its radiation leaks.

While oil and gas prices are going up and up there is concern amongst governments and economists as to what it will do to growth rates and inflation. According to reports, many analysts have forecast the onset of the declining world oil production in the next two to five years. Robert Hirsch a senior energy consultant says that National interest mismanagement and political upheaval can only hasten the onset of this shortage.

On a more positive note, Dr. Birol observed that the world on average is now using half as much oil per unit of Gross Domestic Product (GDP) – a country’s annual economic output – than compared with 1971.This shift is said to be due to efficiency improvements in how energy is consumed, as well as changes to the structure of economic output.

The consequence of the efficiency savings as well as less economic reliance on energy means that prices of products – though affected – are not affected by a hike in oil prices as much as four decades ago. Despite this change, Dr. Birol stressed that oil prices still affect the global economy, and countries with high import dependency are the most vulnerable.

With all this going on, there is an issue that does not seem to come into immediate focus in the media, and that is energy security. Leaving aside the price factor, there is the factor of availability that has to be considered for our future. If there is a petroleum shortage in the world where will Sri Lanka fall in the order of priority?

It is for this reason that oil drilling in the Gulf of Mannar comes into relevance. We need to quickly find out whether there is oil or gas under our seabed and get it out as fast as possible. Sources say that according to the agreement, Sri Lanka will get the right of first usage, which would mean energy security for the nation.

Having said that, there is a crying need to secure the Gulf of Mannar.  Already there are media reports building up against a lack of security. Fishermen from the South of India are crossing into our waters and using fishing methods, which are not sustainable for future fishing harvests, whilst Sri Lankan fishermen and the authorities seem to stand helpless.

We need to secure our waters since Indian fishermen would be the least of our worries if we continue to have our sea gates open – the next thing we know, we might have Somalian Pirates lurking in the backdrop.

With many blocks for oil exploration now up for quotes from international bidders, it is timely for Sri Lanka to secure this area. There are current reports in the media that these rogue fishermen are trawling our seabed and in the process robbing us of our natural resources.

It is time then, to act sharp and take remedial action now, so that when our natural treasure which lies beneath the seabed be it gas or oil is unearthed, we would be able to safeguard the rigs without these dangerous elements lurking in our waters.

(The writer, a PR consultant and head of Media360, was previously a mainstream journalist in print and electronic media. He also edits a new media website.)