Ceylon Petroleum Corporation’s “comedy of errors” continue

Trevor Jayetileke, B.Sc. (Cey), Independent Oil/Gas Prospector of Sri Lanka.

The Ceylon Petroleum Corporation never listens, learns or changes, but keeps rolling along making policy errors with little or no concern of the damage done. The Minister of Petroleum is about to form Petroleum Terminals Ltd., to oversee the joint development with LIOC of the oil tanks (61) of the Upper Farm in Trincomalee built by the British during WW2. But with what gain for Sri Lanka?

The country is now facing the worst ever forex crisis since Independence in 1948 from the British. We remained a Dominion of the British Empire till 1972; but after our new Constitution of Colvin R. de Silva we became a Republic within the British Commonwealth in 1972. In my opinion the worst policy error we made was in the field of energy (petroleum) when our nascent oil industry was nationalized on January 1, 1964.

It was until then was run by the US/UK oil giants – Esso, Caltex and Royal Dutch Shell, which between them handled the wholesale/retail distribution of refined petroleum in then Ceylon. Unfortunately Mrs. Sirima Bandaranaike was pushed to nationalize the petroleum industry by the leftists rathu sahodarayo who were in her cabinet. TB Ilangaratne was a major culprit but the ethos of the reds was beyond their understanding during the heyday of the Communists. This was the beginning of our petroleum woes which continues today in 2022.

The former Chairman of Aitken Spence Mr. Charitha de Silva (in retirement) has clearly explained these circumstances in his memoirs of what led to the nationalization in 1964. Extracts were published in a newspaper article, a copy that I have with me. De Silva went on to form LOLC which is now one of the leading conglomerates of corporate Sri Lanka. He worked for the US company Caltex in Ceylon during his early career as an Accountant and was privy to what took place in this tragic debacle of Sri Lanka that has left us today without US dollars to conduct the affairs of our “export-import” economy.

The Indian ‘game plan” since acquiring the licence as the second player in the petroleum retailing market of Sri Lanka has been to establish its petroleum hub in Trico and spread its wings into the Asia Pacific market. Our next generation will suffer the loss of our energy security to India like our present generation lost its self-reliant economic base to Singapore by the nationalization of the Petroleum industry which gave Singapore the entire refined crude oil market for South East Asia.

I brought in the best Australian independent refined petroleum retailer, Liberty Oil, (having had talks with the BOI in Sydney “Rocks” with the Principal in 2002) to tender for the second player but the CPC wanted US$100 million and we pulled out. The CPC finally gave it very cheap to the Indian IOC (almost for a song) which is today in a sound position compared to the CPC. Are we not able to understand what damage we are doing ourselves by such policy decisions with no regard to our economic well being?

My company with two other directors went to New Delhi in 2005 and promoted the first licensing round (2007) for offshore blocks in the Mannar basin and we did power point presentations to two of the best oil explorers owned by the Government of India, namely IOC and ONGC (OVL). I even gave the initial marketing 2D Data Package Disc given to me by Norwegian TGS-Nopec Office based in Perth, WA for our ‘oil roadshow’ that we conducted at our own expense while the CPC did ‘oil roadshows’ in the US, UK and Malaysia getting no response from those efforts.

Though ONGC of India tendered for the offshore oil blocks offered, and bought the 2D Seismic Data Package for US$ one million, they were not given a licence for oil exploration in the first round which was another policy error of Lanka.

My advice to the Minister of Petroleum with my 20 years experience in our oil exploration program since 2001 is to jointly develop the oil/gas potential in the Cauvery Basin, one third of which is in our territorial waters which will bring the best possible results for both India and Sri Lanka. Sri Lanka depends totally on imported crude to run its only oil refinery and India only produces about 25% of its requirements of crude and imports the balance for running its oil refineries.

I was Adviser to the Ministry of Petroleum Resources Development of Sri. Lanka between 2011-2014, which helped to bring about the policy shifts to make Sri Lanka receptive to foreign investors including the New Petroleum Act 2021, having spent my valuable time and expertise on my motherland. I did all this gratis.