Sri Lanka is planning to launch “a mini-round” around end-April comprising just Block M2 that will be followed by a full licensing round, perhaps as early as the year-end.

Block M2 is the former Block SL 2007-01-001 on which UK independent Cairn Energy made two gas discoveries from the four wells it drilled before relinquishment.

The tract, which covers 3000 square kilometres, is home to the Dorado and Barracuda gas discoveries that are around 38 kilometres apart.

Dorado that lies 30 kilometres of Sri Lanka’s west coast has proven and probable recoverable (P50) reserves of around 350 billion cubic feet of gas, according to Chaminda Kularathne, petroleum geologist at the Petroleum Resources Development Secretariat (PRDS).

He said that Barracuda is “potentially large”, with P50 reserves of around 1 trillion cubic feet.

However, Kularathne told delegates at the OTC Asia conference in Kuala Lumpur that at Barracuda the challenge is to be able to image below the basalt to map the lower sand levels to obtain a more accurate reserves estimate.

Other prospects including Dorado North and Wallago were also identified on the deep-water Mannar basin block by Cairn.

Meanwhile, the PRDS is lining up new multi-client seismic and gravity magnetic surveys that are intended to give prospective bidders up to date data ahead of the next (third) full licensing round.

Two companies showed “serious interest” and the government agency is about to sign a contract for a multi-client seismic survey with Western Geco, added Kularathne.

The PRDS received four bids for the gravity magnetic survey work and these bids are under evaluation.

“We are quite keen to look at a bigger bid round” maybe as early as year-end, said Ranali Perera, a petroleum analyst with the PRDS although Kularathne claimed it might not be launched until late 2019.

Sri Lanka’s third licensing round is expected to include both deep-water Mannar basin blocks and shallow-water tracts in the Cauvery basin off the island nation’s east coast.

Perera said that Sri Lanka is further revising its fiscal regime to make “very investor friendly” and also trying to develop a national gas policy.

“Initially state take was high (around 80%),” she admitted, adding the regime today is “more progressive”.

Royalty is now 5% down from 10% while legislation has been drawn up outlining the state’s participation in blocks for the upcoming licensing round.

However, Perera said the PRDS was not yet in a position to come up with a pricing structure for oil or gas produced in its waters.

“We need to look at the reserves in place and look at the scope for consuming these reserves in the domestic market,” she said.

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