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Petroleum Development Authority DG sees opportunity in Sri Lanka’s energy crisis

08 Apr 2022

By Nishant Ugal  Surath Ovitigama sees a glimmer of hope in the development of indigenous hydrocarbon resources in Sri Lanka, even as the country faces one of the worst economic crises in its history. President Gotabaya Rajapaksa declared a state of emergency, since revoked, amid nationwide protests over worsening food and energy shortages, and the country’s Cabinet resigned en masse on 3 April. Ovitigama, director general of the upstream regulator Petroleum Development Authority of Sri Lanka (PDASL), says that domestic oil and gas production could have helped prevent the current energy crisis. “I believe that Sri Lanka is in a very weak and vulnerable position… and had we had domestic production, that could have taken care of one of our biggest import bills,” he says. Ovitigama, who has ushered in some sweeping changes at PDASL in recent months, turning it into a relatively stronger independent upstream regulator, remains hopeful that Sri Lanka’s ongoing economic plight could well turn into an opportunity in the future. “We have a chance to really be a game changer,” he says of the current turmoil. “In years to come, people can look back and see that the worst of times was the birth of Sri Lanka’s renaissance, at least in terms of energy security.” For years, Sri Lanka has been trying to develop domestic hydrocarbon production and scale up its exploration efforts, offering multiple offshore blocks to international operators. But despite a couple of offshore discoveries on Mannar basin M2 acreage long ago relinquished by Cairn Oil & Gas, Sri Lanka has thus far failed to commercialise any domestic hydrocarbon production. Fiscal stability Ovitigama believes new legislation and an independent regulatory authority could provide fiscal stability for investors and lead to credible results in terms of exploration-related activities. “We think we’ve significantly de-risked engagement and the new [Petroleum] Act, of course, carries fiscal stability clauses in it,” he says. Ovitigama adds that the regulator has significantly reduced investment barriers for the industry and also brought down the financial commitment required to carry out exploration. “So a lot of the things that were deterring investors over the past 10 years or so, over the last one and a half years we’ve managed to, perhaps quietly but significantly, get it done,” he says. He believes the conventional methodology for carrying out oil and gas exploration rounds might be both time-consuming and expensive for a country like Sri Lanka. Engaging directly Ovitigama says PDASL is working with international companies that could participate in offshore joint study agreements or directly engage in a potential exploration tract. He says the country has received interest from multiple international parties for joint study agreements and the first such exploration deal is expected within months. Sri Lanka’s efforts to re-demarcate its offshore acreage have led to tangible results and renewed interest in the nation’s oil and gas exploration sector, he claims. Ovitigama maintains that along with decision-making powers, PDASL has total financial independence, providing stability to investors regardless of changes in ministers or governments. Industry veteran Ovitigama is himself an industry veteran, having spent close to two decades in global oil and gas. He studied mechanical engineering at Manchester University in the UK and in 2003 started working as a graduate engineer with Amec Natural Resources, now part of Wood Group, in Aberdeen. During his stint with Amec, he worked on multiple projects in engineering and project management roles based in the North Sea and at the Malampaya facility in the Philippines. In 2011, Ovitigama joined the UK independent Premier Oil — now merged into Harbour Energy — and handled challenging roles in the engineering and operations support teams for the ageing Balmoral floating production, storage and offloading vessel and newbuild Solan facilities. Ahead of his assignment with Sri Lanka’s upstream regulator, Ovitigama was working in Vietnam with Idemitsu Kosan on the Sao Vang & Dai Nguyet offshore gas development. However, Sri Lanka was never far from mind and he got passionately involved in developing the nation’s oil and gas sector, taking up the challenging role at the nation’s upstream regulator in 2020. Ovitigama says he brings a solid industry viewpoint to PDASL, key to the organisation's drastic transformation over the past months. “I could have had a very comfortable staff job with any one of these companies, but I always chose experience over comfort,” he says. “With this drive to come back, I’m really happy that it did pay off in the end.” Renewables in focus Along with the primary responsibility of developing the indigenous oil and gas industry, Ovitigama also has a crucial role in steering offshore renewable energy projects in Sri Lanka. He believes the country’s advantageous hub location, coupled with the potential of its offshore acreage, provides the platform for “a very vibrant scene with different types of energy sources”, including offshore wind and even solar power. In February, PDASL signed an agreement with Greenstat Hydrogen India to collaborate on a pilot project for generating green hydrogen in Sri Lanka. “We’re really pleased that we’ve actually got the green hydrogen project moving already, because we can test all of these things out,” he adds. Ovitigama believes the regulator has a key role to play in the government’s long-term vision for decarbonising its energy sector. In the shorter term, steady leadership will be crucial to attract energy investment and bring supply stability to a nation now struggling just to keep the lights on. This article first appeared on Upstream Online


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