Norwegian oil pact halted

By Santhush Fernando
President Mahinda Rajapakse narrowly salvaged Sri Lanka’s oil prospectus by ordering the termination of a pact with Norwegian oil company TGS-NOPEC and by appointing a negotiating committee comprising independent persons, during a meeting with oil industry stakeholders last Thursday.
President Mahinda Rajapaksa has directed the Acting Attorney General C.R. de Silva to examine breaches in the controversial oil exploration seismic survey agreement and to also review an amendment agreement that has been submitted by Petroleum Ministry to Cabinet without obtaining any legal advice.
Following legal opinion of independent persons and the Attorney General it was held that TGS-NOPEC was in breach of the agreement it had entered in 2002 with Ceylon Petroleum Corporation and thereby had caused ground for the government to terminate the agreement.
The then CPC Chairman Daham Wimalasena entered into a pact with TGS-NOPEC on February 13, 2002, authorizing the Norwegian company to conduct seismic surveys in territorial waters of Sri Lanka in three phases.
Further it was noted that if Sri Lanka enters in to an agreement with India or China for the allocation of blocks on direct nomination basis without international open bidding it would tantamount to the breach of the 2002 agreement by Sri Lanka and thereby make Sri Lanka liable to pay compensation.
It also transpired at the meeting that Petroleum Resources Development Ministry Secretary A. P. A. Gunasekera had not sought the opinion of the Attorney General as directed by the Cabinet of Ministers on July 6.
It further came to light that the President and the Cabinet of Ministers had been misled to wrongfully assume that the government was in breach.
President Rajapakse had directed Treasury Secretary Dr. P. B. Jayasundara to procure necessary funds to obtain data and added that there had been instances where Sri Lanka had paid compensation to matters having no earning potential, whereas in this case it was the country’s biggest economic asset.
During the meeting with Petroleum Ministry officials and state enterprises, watchdog- Strategic Enterprises Management Agency (SEMA) had refuted a recent Cabinet Memorandum allocating oil exploration blocks to India and China it was claimed.
A new agreement to cover up an earlier agreement said to be unfavourable to Sri Lanka was also halted pending Attorney Generals’ advise, The Nation learns.
The group was represented by Chief Operating Officer (COO) of Reconstruction and Development Agency (RADA) Saliya Wickremesuriya, Petroleum Resources Development Minister A. H. M. Fowzie, Ministry Secretary A. P. A. Gunasekera, Director General (PR-DG) of the Petroleum Resources Development Committee (PRDC), Dr. Neil de Silva and Minister Fowzie’s son Nawzer Fowzie.
It is estimated that Sri Lanka’s oil prospective is approximately nine billion barrels amounting to one per cent of the world oil potential.