Weakened Cairn exits Sri Lanka

Monday, 27 April 2015 00:01 - - {{hitsCtrl.values.hits}}

Historically-low international crude oil prices and sharp increases in the cost of exploration operations have forced Cairn India to exit operations in Sri Lanka. Despite a slashing of its capital expenditure from $ 1.2 billion down to $ 500 million, Cairn posted a loss of Indian Rupees 2.41 billion during the fourth quarter of 2015; the first quarterly loss for the company in over seven years. Cairn’s exit from Sri Lanka represents an about face for the company which had issued statements up until last year expressing optimism over its prospects for gas production in the Mannar Basin. “Cairn is in discussions with the Sri Lankan Government to evaluate options for monetising the gas discoveries,” the company had said in its 2013/14 annual report. Cairn had reportedly spent $ 150 million through the first phase of exploration which resulted in the discovery of two gas deposits – Dorado and Barracuda – while drilling had also been completed for a fourth exploration as part of Phase II of the project. The sites were said to have held reserves approximately equivalent to 74 million barrels of oil Cairn was awarded a block situated in the Mannar Basin following a preliminary licensing round in 2007 where it competed against OVL and Canada’s Niko Resources.

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