 The government today signed the agreement
with Cairn India Ltd to explore and produce
hydro - carbon and natural gas in the Mannar
Basin in Northern Sri Lanka.
According to the Petroleum Resources
Agreement, Cairn Indian Ltd will start
exploration activities in Block
SL2007/01/001 in the Mannar Basin which
covers 3,400 sq. km. at depths between 200
to 1,800 m within 6 months from today.
Minister of Petroleum and Petroleum
Resources A. H. M. Fowzie and Chief
Financial Officer Indrajith Benerijee signed
the agreement on behalf of Sri Lanka and
Cairn India (Pvt) Ltd, respectively, in the
presence of President Rajapaksa.
Mr. Benerijee handed over USD 1 million as
Signature Bonus on the agreement to
President Rajapaksa at the agreement signing
ceremony held at Temple Trees this morning.
The exploration spending schedule of the
company in the next three years is expected
to be USD 112 million.Once commercial
extraction commences, the oil company is
allowed up to 65 percent of the revenue to
cover its investment. The government will
receive a 10 percent royalty, USD 50 million
Production Bonus, the profit share based on
the investment multiple, and 15 % tax on
Contractor Profit and other necessary taxes.
The Exploration licence is valid for
eight years and divided into three stages of
three, two, and three years. The Government
of Sri Lanka will receive all exploration
data, and the Contractor will be required to
support education and training of staff,
support environmental studies and transfer
related technology to Sri Lanka.
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