The New Nation - Internet Edition

AFP, Colombo

Sri Lanka is seeking international expertise to conduct seismic surveys off the southern tip of the island in a hunt for new oil deposits, a senior minister said on Friday.

"Initial seismic surveys shows that there are prospects for oil deposits in the southern seas and we are calling for international tenders to conduct a two dimensional seismic survey," Petroleum Minister A. H. M. Fowzie told AFP. The survey is expected to cost about 6.5 million dollars, he said. Sri Lanka has also sought international investors to explore oil off its northwestern shores.

Seismic surveys conducted by Norway's TGS Nopec have shown that there was potential for oil and gas in the Cauvery basin off Mannar. Officials estimate the basin to carry oil reserves in excess of one billion barrels.

Fowzie said over 40 foreign firms showed interest when the government shared data on three out of eight blocks earmarked for exploration, during roadshows held in London, Houston and Malaysia last month. Successful bidders have to pay the Sri Lankan government a 10 percent royalty fee on oil produced and a 35 percent tax on profits in return for an eight-year license to prospect for oil, he said.

Two blocks in the basin out of the eight have already been allocated to the governments of China and India, which have to pay a 100-million- dollar deposit each for the privilege.