Lanka to offer oil blocks to India, China

Sri Lanka plans to allocate an oil block each to India and China without the usual bidding process and will soon invite international bids for the remaining blocks, a senior official said in Beijing.

"Our plan is to allocate two blocs -- one bloc to India and one to China -- without going through the bidding process," Sri Lankan Foreign Secretary, Palitha Kohona said.

"For the other areas, there will be a bidding process launched very soon. Whoever bids the highest will get them," he said when asked whether Chinese oil companies, who are keenly scouting around the globe for energy resources, have expressed interest in prospecting for oil in Sri Lankan waters.

"The current assessment is that the deposits are substantial," Kohona said, ahead of Sri Lankan President Mahinda Rajapakse's upcoming state visit to China from February 26 to March 4. During this time, the

two countries are expected to sign a series of agreements, which may include energy cooperation deal.

Earlier, media reports from Colombo said that the Sri Lankan government may offer one block each to China and India out of the eight identified oil blocks in view of the country's close relations with the two countries.

The Gulf of Mannar has been identified for the first phase of oil exploration, which is likely to begin in August 2007, the news report said.

Rajapaksa will visit China to participate in a series of events to celebrate the 50th anniversary of diplomatic relations between Sri Lanka and China.