Colombo loses Cairn!

Friday, 11 February 2011 02:16 -     - {{hitsCtrl.values.hits}}

  •  Pioneer oil driller goes to Singapore for logistical support after less enthusiastic response from SLPA
  • Shipping industry fuming over loss of opportunity and revenue to Sri Lanka

Cairn Lanka Ltd., which has got the contract to start exploratory drilling for oil is looking for logistical support from Singapore for a project in Sri Lanka allegedly after a less enthusiastic response from the Colombo Port authorities.The move by Cairn has caused serious disappointment within the local shipping industry on account of loss of opportunity and revenue.

The first stage of the Colombo South Harbour was completed yesterday while the breakwater is being constructed speedily. Here, a ship is engaged in dredging the 6.8km long breakwater, during a media tour to showcase the completed sections of the Asian Development Bank (ADB) funded project – Pic by Romesh Danushka Silva   

Industry sources said that Cairn had to look to Singapore as support and response from Lankan port authorities had been lukewarm.  Others however said that Colombo doesn’t have the competence to handle logistical support apart from Colombo port being very busy with sharp growth in ship and container handling.

The latter view is being rejected by shipping experts who said that Colombo can give logistical support if Lankan authorities were determined.

Cairn plans to start exploratory work in June or July. This week it has called for global expression of interest from suitably experienced services contractors for “logistical support base and associated services at Singapore” in support of the Exploratory Drilling in this deepwater offshore block in the Gulf of Mannar in deep water.

This yard is supposed to store the tubulars, and other drilling equipment and chemicals etc. temporarily and loaded on the company hired supply vessels and rig at Singapore on their way to Sri Lanka.

Only contractors who have a minimum of five years experience in providing these services, any or a combination of, in support of an offshore deepwater drilling campaign will be considered. Only contractors who have commensurate experience in supplying a mobile equipment package and services that meets or exceeds the criteria detailed below, in support of a deepwater exploration drilling campaign, shall be considered.

Drilling rig for the aforesaid requirement has been contracted and is expected to be mobilised to the drilling location sometime in second week on June 2011. Cairn is exploring an option to load the tangibles onto the Drill ship at Singapore enroute her mobilisation to the drilling location. CLPL is looking to lease an area at Singapore for storing the tangibles and other equipment. The contractor would be required to provide support services to manage the supply base as well.

Sri Lanka to spend $350 m to expand Colombo seafront

COLOMBO (Reuters) - Sri Lanka plans to build a new port city by reclaiming the seafront at a cost of $350 million and selling the land as it expands the island nation’s main harbour, the state-run Port Authority said on Thursday.  

As presently envisaged, the creation of 340 acres of new land would partially, if not entirely, block Colombo’s historic Galle Face Green seafront by moving the shoreline farther away.

That stretch of shore is in front of the current location of the Defence Ministry and army headquarters, where Shangri-La Hotels Lanka Ltd., a subsidiary of Hong Kong-listed hotel operator Shangri-La Asia Ltd is building a 500-room hotel.

“It is going to cost us about $350 million to fill it up,” Nihal Keppetipola, managing director of Sri Lanka Ports Authority, told Reuters.  

The filling would be funded by deposits on sales, he said.  “So we are not going to put up the capital investment. People, including foreigners, will put an advance and then purchase. We will use the money to fill,” he said.  The area will have eco-parks, residential areas, offices, and high-rise buildings, Keppetipola said.  

However, he declined to comment on pricing.  “We will be working on that. But we have to make sure that we earn very much more than $350 million,” he said.  

Sri Lanka since 2004 has imposed a 100 percent tax on land purchases by foreign citizens, and it was not immediately clear whether that tax would apply to the new land.  

The Indian Ocean nation since the end of a 25-year war in May 2009 has been spending heavily on ports to attract much-needed foreign investments to its $50 billion economy.

Already, the government has been creating new land about a kilometre away from the proposed area, as part of its expansion of the Colombo port.  

South Korea’s Hyundai Engineering and Construction Co. is expected to complete a $300 million port expansion by April 2012 with a 6.8 km breakwater for three new container terminals.  

Sri Lanka in August signed a $450 million deal with China Merchants Holdings and local conglomerate Aitken Spence to build the first of the three terminals.

Each terminal is expected to add the capability to handle 2.5 million TEUs more. The port now handles 4.5 million TEU.  The island nation is also hoping to attract $1.5 billion in investment to build a new city and add services to the new Hambantota port in the deep south, which has been financed by China and opened in November.