Govt. rejects Oman’s request for exploration block in lieu of interest for $ 3.6 b loan

The Government said yesterday that it had turned down a request by the Sultanate of Oman to grant an oil exploration block in Mannar basin in lieu of interest payments on the $ 3.6 billion credit facility extended to Sri Lanka.

The Cabinet of Ministers at its meeting on Tuesday agreed on this stand and the Government said it reached an agreement with Oman accordingly.

“In the Cabinet decision there was no agreement in relation to the request for an exploration block. It is only the loan agreement that we have reached for $ 3.6 billion to be repaid after one year for the procurement of oil for Sri Lanka,” Cabinet Co-Spokesman and Plantation Industries Minister Dr. Ramesh Pathirana said.

Last month, Energy Minister Udaya Gammanpila said $ 267 billion worth of oil and gas resources hidden in the Mannar Basin could generate three times the total debt of the country.

In a Gazette notification, the Ministry published a map of blocks for joint exploration for oil and gas in the Mannar Basin. The map contains 873 blocks of 15x15 km each in the Mannar Basin and will enable investors to select preferred plots for exploration without difficulty.

The Energy Ministry has endeavoured to make the map and exploration process engaging to investors in the Mannar, Kaveri and Lanka basins. It was noted that several foreign investors had expressed interest in the mapped blocks.

The newly-published map and process is aimed at attracting the top 20 oil and gas companies in the world to invest in the sector. The project has potential to deliver over two billion barrels of oil and nine trillion cubic feet of natural gas, it is estimated.

“They have made such a request to allocate a block for the investigation of oil reserves in Sri Lanka, but it was not approved by the Cabinet,” Minister Pathirana clarified.

He said the Government only agreed to make the interest payments for the credit facility obtained, adding that it was not possible to set off a land for a loan.

In July, an Omani delegation led by Shumookh International Executive Director Abdullah Al Bulushi called on President Gotabaya Rajapaksa and Prime Minister Mahinda Rajapaksa under the investment bubble concept.  

The delegation also held a series of constructive discussions with Finance Minister Basil Rajapaksa, State Minister of Finance, Capital Markets and State Enterprise Reforms Ajith Nivard Cabraal and State Minister of Solar, Wind and Hydro Power Generation Projects Development Duminda Dissanayake on the specific investment opportunities available in Sri Lanka. The delegation also paid field visits to potential investment sites in Colombo and Hambantota.