Sri Lanka oil: Mannar Basin’s new exploration bidding round

On the 7^th of March 2013 Sri Lanka’s government held an international road show to facilitate the bidding process for the offshore exploration rights for several blocks[1], locations: Houston, London, Singapore.

It may be interesting to note two facts: in this round there is almost a unanimous interest: Exxon, Total, Eni, BP, Gazprom, Petronas[2].

This enthusiasm probably derives from the successful operations of Cairn-Vedanta. The Anglo-Indian company in 2011 found oil.

This leads to the second interesting fact: the previous road show was held in 2007[3], same locations (Houston, London, Singapore). Did anybody hear about the Eelam War? It ended quite bad for the LTTE, the separatist army, which was annihilated and also for more than 360 000 Tamil civilians, chased out like wild animals. More than 80 000 civilians are supposed to have died in the final stage of the conflict. Well, in 2007 the war had just re-started. Not a surprise that the bidders were a bit more cautious.

In fact the LTTE was one of the best trained, motivated and fierce liberation army in the world, with an exceptional navy. During the civil war, the LTTE navy, the Sea Tigers have been able to evenly match the Sri Lankan one. The region controlled by the Tamil Tigers was run like a state, with banks and post offices. And it was rely heavenly on sea supply lane. So it was vital for the LTTE to have a successful protection from the sea. Then in 2007 India started patrolling. India’s position has been ambiguous, to say the least, with the LTTE.

But in 2007 the idea of buying exploration rights in war zone was simply mad. Unless the government pledged beyond any reasonable the certainty of the deal…

How can you guarantee such agreement during a conflict?

Probably you planned carefully to eliminate any resistance, any dissent. And with 1 billion barrels of oil, you can buy international support and help.

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[1] http://www.ihs.com/events/ihs/sri-lanka-roadshow-mar-2013.aspx

[2] http://www.bloomberg.com/news/2013-02-26/exxon-total-study-sri-lanka-oil-reserves-ahead-of-biggest-sale.html

[3] http://www.psg.deloitte.co.uk/NewsLicensingRounds_LK_0806.asp

Old colonial games: the French chapter

France became the global defender of peace and international justice when it antagonized the USA for the war in Iraq. Legions of citizens looked at Paris as the guardian of civilization: again the nation of liberte egalite fraternite stood against the brutal, warmongering forces which regularly try to strangle the universal values of citizenship and human rights. Very well, nice, lovely. Only, France didn’t oppose USA for those reasons; it is true that they considered the war in Iraq as unlawful: but the big problem was that they were excluded from the loot, not the war itself!

In fact France is not against colonial imperialism: it was one of the major colonial forces in the past; what France object is to be left behind in the race. In Iraq Paris could clearly see that the Iraqi oil was going all in American pipes. Mon Dieu! Never again!

So when the Arab spring shook the region, France was more than ready to invade another country and to plug French pipe in the Libyan oil wells. The war in Mali signifies a new commitment of France in Africa. Mali’s undersoil is supposed to contain uranium, oil, gas and gold[1]; it is also a neighbour of Nigeria, which has an increasing agitated scenario by its own Islam groups[2]. Whatever the reason, France is on the move to re-assert its sphere of influence[3].

France and UK foreign ministers Kouchner and Miliband meet Sri Lanka’s President Rajapaksa.

So I have a rule of thumb: if you see a French diplomat on the move, ask yourself what business is in sight. During the last days of the Eelam War, we saw Kouchner and Miliband (respectively France and UK foreign ministers) running to make pressure on Colombo’s government. What kind of pressure? Well some photographic posing, speeches in favour of human rights and the rule of law. In brief, absolutely nothing. Now, Great Britain has very clear economic interests: they sell weapons to Sri Lanka and they are actively involved in the oil exploration in the Mannar Basin. Cairn and Vedanta are listed in London, though they are Indian companies. But France will remain seated while others are making money in the usual colonial way? Mon Dieu, impossible!

LTTE member Parithi Killed in Paris, 2011

Last year a former LTTE leader (the secessionist Tamil movement, defeated in 2009 with the massacre of 80 000 civilians),  Nadaraja Matheetharan alias Parithi was killed in Paris by agents of the Sri Lankan secret services[4]. My big question was: how France can allow such a move on its soil? Especially after Sri Lanka should maintain quite a low profile with the international community and the West… What happened?

Well Cairn and Vedanta don’t hold an exclusive of exploration: they have concession for ONE zone. In the 2013 Sri Lanka will organize another round of auctions. Which are the front-runners? Exxon and Total[5]. I think we’ll hear a lot of noise in Geneva about committee and votes, and alignment, and new resolution and all this sort of empty talking. I suspect that the murder of Parithi was a “gesture of good will” from France in the perspective of the oil exploration rights bidding. Human rights declaration is not worth the paper is written on if you don’t have the political will to enforce it. Mon Dieu, colonial times are over, can can’t interfere in internal matters, we only give wise, impotent advices. Of course the farcical clash of interest is merely superficial: the government of Sri Lanka can show its citizens and supporters that they stand against the old colonial power, the European countries can show their own citizens, they stand for the right cause, but diplomatic route will take time. And we have plenty of time, don’t we? History is not written in a day, oil contracts are. Anything else left to discuss in Geneva?

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[1] http://www.globalresearch.ca/the-war-on-mali-what-you-should-know/5319093

[2] http://warisacrime.org/content/us-hands-mali

[3] http://www.zerohedge.com/news/2013-01-17/us-drones-boots-arrive-mali

[4] http://tamilinsight.com/mypress/content/suspect-implies-sri-lankan-involvement-parithi-murder-le-parisien;

http://www.srilankamirror.com/news/4050-paris-protest-against-parithi-killing;

http://www.defence.lk/new.asp?fname=Two_charged_for_killing_top_LTTE_leader_in_Paris_20121115_04;

[5] http://www.bloomberg.com/news/2013-02-26/exxon-total-study-sri-lanka-oil-reserves-ahead-of-biggest-sale.html

Time, Oil and war games. The Falklands case

Advance: A line of British soldiers in camouflage during the Falklands War
Photo mirror.co.uk

The Falklands war was not oil-driven. In the first place, it was started by a military dictatoriship in Argentina to distract public attention. Second, the UK response was equally motivated to captivate the electorate and to twist public sympathy towards the Tory. It was risky? Probably yes, but it paid wonderfully well for Margareth Tatcher.

These were the driving forces in 1982 to catalyse an armed conflict. And yet everybody at the time knew that around the Falklands it was plenty of oil. How much? Well, these are always estimates, but it seems that the reserve could amount to 60 billions (almost a quarter of Saudi Arabia reserves. Not bad) but probably only 3.5 are commercially recoverable¹. Since the 1994 Argentina and UK have been in negotiations to settle the matter after the conflict. But Buenos Aires walked away and from 1998 British companies have started to try their luck².

Falkland Oil & Gas shares halved after an update on operations around the Falkland Islands. Photograph: Gary Clement/Reuters

Nowadays oil exploration is at an advanced stage in some platform and production in at least on well (Rockhoppen Sea Lion, almost 1,3 billion barrels, expects to start its first shipment by 2017³).

The question is: did the Brits have a good idea about oil presence in the Falklands? The answer is a sound and round yes. The first time the British government knew about oil in the Falklands was in the remote 1969. At the time Richard Crossman, member of the cabinet, wrote in his diaries that the Foreign Office wanted to conceal the thing and prevent any further testing⁴. The Foreing Office feared of a possible aggravation of the territorial dispute with Argentina. Why? In public the British government was confident and bold about legitimacy of its claim. In private not so much. In 1936 John Troutbeck, head of Foreign Office American Department summarized difficulty of Britain’s position:

“Our seizure of the Falkland Islands in 1833 was so arbitrary a procedure as judged by the ideology of the present day. It is therefore not easy to explain our possession without showing ourselves up as international bandits.”⁵

By 1975 almost 50 companies had applied to Britain for exploration rights. So when in 1982 Gen. Gualtieri invaded the islands, London proclaimed to intervene to safeguard the independence of the Falkland inhabitants and give them freedom of choice. Beside the fact that after the seizure in 1833 they evicted all the Argentinian citizens, so in the Falklands were living only British descendants, few years earlier, they had no problem in forcing the evacuation (against their will) of the inhabitants of the Diego Garcia, an island in Indian Ocean. Moreover all the inhabitants of the Falkland are working for a private company, which is basically the sole employer and land owner of the island: the Falklands are basically private property⁶.

 The war is still remember as a tremendous success for the British army and it represented a turning point for the electoral success of a Tory party that was depressing an entire generation of workers. 30 years later those military operations proved to be also a good investment. And it didn’t happen accidentally.

Cairn Lanka is commencing seismic acquisition in Mannar Basin with an investment of over US $ 100 million. President Mahinda Rajapaksa flagged off the first ever 3D Seismic activities in the Mannar Block from the Colombo Port recently.
Photo dailynews.lk

Now, 1 billion of barrels are lying in the Mannar Basin, with commercial production expected by 2014⁷).

Exploration rights were sold before the end of the war and when the block was still in an area under the control of the LTTE. The company, Indian Cairn, listed in the UK, has been sold to another Indian corporation, the giant Vedanta, listed in the UK as well.On its side of the Strait India has oil operations (it was even speculated that it could stolen from the Sri Lankan reserve).

Are we still asking why India helped Sri Lanka in slaughtering 70 000 Tamils? Or why the UK remained silent and recently invited president Rajapaksa for the Diamond Jubilee?

Nothing new under the sun, nothing.

Sri Lankan Tamil regugees (IDP) from the Mannar region.
Photo AP

1http://www.independent.co.uk/extras/big-question/the-big-question-could-oil-exploration-of-the-falklands-lead-to-a-renewal-of-hostilities-1907412.html

2http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/9178464/Falklands-oil-whos-drilling-where.html

3http://en.mercopress.com/2013/01/09/rockhopper-planning-minimum-three-wells-offshore-falklands-in-2014

4http://www.guardian.co.uk/theguardian/2010/feb/27/falklands-oil-dispute-ian-jack

5http://www.guardian.co.uk/theguardian/2010/feb/27/falklands-oil-dispute-ian-jack

6http://en.wikipedia.org/wiki/Falkland_Islands_Holdings

7http://www.thaindian.com/newsportal/sci-tech/indian-company-drills-second-oil-well-in-sri-lanka_100572252.html

2006 is the year: Sri Lanka, LTTE and the oil alliance

In this year, the IV Eelam War broke out. After the attempt of the Peace Talks from 2001 to 2005, both parties strove to resume hostilities. Many reasons have been added for the failure of the peace process. For the LTTE and especially its leader, Prabhakaran, the agreement was to far away from full independence. Of course that target was impossible to reach through negotiations, therefore only the military way was open for that purpose. On the other side the Sri Lankan government had promised even too much in the eyes of its more nationalistic constituency. Therefore in 2006 everybody was keen to start again the war.

Erik Solheim and Velupillai Prabhakaran
Photo nation.lk

The biggest loser was Norway. The Nordic country in fact dedicated a lot of efforts to find a deal. If you consider that from 2001 TGS-Nopec, a company specialized in seismic survey for oil exploration, was showing enthusiastic reports about the possibility to find petroleum reserves, you may guess that the government in Oslo had some undisclosed interests. If you add that the special envoy, Mr Erik Solheim, just on the brink of the Peace Talks ending was nominated Minister for International Development¹, with specific interest in the oil sector, for the Norwegian initiative “Oil for development”,Norad², (see Solheim’s activity in Ghana³, Sudan⁴, Angola⁵).

 But Norway is not the only country in the world searching for opportunities in the oil sector. China and India in the same period were involved in a tough race to secure contracts for natural resources

Union Petroleum Minister Mani Shankar Aiyar with the President of China National Petroleum Corporation, Chen Geng in Beijing on January 13.

around the world. The competition was so strong, that their bidding war was driving prices up everywhere. Thus the two Asian giants decided to form an alliance. “The agreement aimed at preventing the two nations competition for oil assets pushing up prices, symbolises their increasingly assertive role in global energy politics” (source: Financial Time).⁶

 One of the first country to test this alliance, was precisely Sri Lanka. President Rajapaksa, soon after he received information about the possible presence of oil in the Mannar Basin, decided to get rid of Norway and offered India and China one block each ⁷⁸.

We are far from saying that the Peace Talks were interrupted for the oil discovery; we are also not affirming that the IV Eelam War was oil-driven and that the India and China support of Sri Lanka was motivated purely by the natural resource deal.

We can see a series of coincidences and we argue that oil played a role in Sri Lanka, maybe only a secondary one, but not completely marginal. Norway is our first indicator; the Nordic country didn’t though it could provide more transparency on its conduct, but had clearly a vested interest in the peace process in relation to the oil reserve. China and India had additional reasons to back

Anti-lankan protest led by politician and activist Vaiko in Tamil Nadu.
Photo onlanka.com

Colombo, but it was a clever and opportune gift from Rajapaksa to offer natural resources in exchange of their help. In particular it could have represent the convincing point for New Delhi, to intervene without hesitation. India has oil operations on its side of the Strait, and the idea of leaving oil reserve in the hands of the LTTE or China alone could have been the decisive argument to make move. The energy sector is more vital and strategic for India that any other alliance of convenience between China and Sri Lanka.

If you think that oil doesn’t play any role in conflicts around the globe, then you can ignore our thesis. On the other hand, if you assume that natural resources are too important in contemporary geopolitical scenarios, and so are always involved, maybe to different extent, you may be tempted to spend more time on this hypothesis.

 

 

1http://www.regjeringen.no/en/the-government/previous-governments/the-structure-of-the-registry/governments/modern-times/governments-since-1945/jens-stoltenbergs-second-government.html?id=449424

2 http://www.norad.no/en/about-norad

3http://www.dailyguideghana.com/?p=14300

4http://www.norway-sudan.org/News_and_events/Development-Cooperation/Minister-Erik-Solheim-leaves-office-/

5http://www.chathamhouse.org/media/comment/view/179785

6http://www.ft.com/intl/cms/s/0/25b30866-83a4-11da-9017-0000779e2340.html#axzz2GKs3EEjO

7http://articles.timesofindia.indiatimes.com/2007-12-21/international-business/27952014_1_exploration-blocks-oil-and-gas-cauvery-basin

8http://www.sundaytimes.lk/090920/FinancialTimes/ft08.html

The Trajectory of Norwegian peace-building:Sri Lanka, LTTE and the job experience of Mr. Solheim

LTTE chief negotiator S. P. Tamilselvan,Sri Lanka Government chief representative Minister Nimal Siripala de Silva and Norway’s International Development Minister Erik Solheim.
Photo/AsianTribune

In 2001 Norway brokered a truce between the Sri Lankan government and the separatist army of LTTE. The mission of the Nordic country is to negotiate with the parties. In an interview with BBC, the Norwegian envoy Mr Solheim justified the efforts of his country out of pure compassion: “Security policy for the 21^st century: if you want a peaceful Norway, you need a peaceful world.” A a safer place for our children.¹

Praiseworthy.

It is our evil nature to investigate the good deeds and we discover a coincidence: the very same year a Norwegian company, TGS-Nopec started seismic survey in the Mannar Basin in search of oil. From 2001 to 2006, the company amassed very promising data. The press release are nothing less than enthusiastic.

LTTE’s leader Prabhakaran with Norway’s envoy Mr Solheim.
Photo/Tamilnet

We don’t want to draw unnecessary conclusions. In scientific thinking you need to be very careful of two facts happening in the same time. Imposing causality or correlation could be in the eyes of the beholder. We see a strong effort by Norway to support the independence claim of a group of rebels. It is important to distinguish between LTTE and Tamil nationalism. The legitimacy of Tamil independence is not the subject. The debate concerns the fairness of giving such support to an organization that committed many heinous crimes. The Sri Lankan state is equally responsible of atrocities, with aggravating circumstances of being a governmental entity. The point is that Norway made a bold decision.

At the same time it is important to recall that Norway is a powerhouse in offshore drilling, with a first class expertise in the field. The Mannar Basin in Sri Lanka presents matchable conditions.

The peace process run in parallel with the oil exploration. And when the peace talks collapsed, so did the survey campaign.

Erik Solheim with workers of the oil sector

Erik Solheim, the man sent by Norway to negotiate the peace, was first a special envoy. In 2005 he was promoted Minister for International Development, with responsibility of leading the Oil for Development program, Norad². In this job he visited Ghana³ Sudan⁴, Angola⁵ with the clear purpose of consulting, advising, lobbying the oil sector for Norway. The Norwegian model of development is one of the most advanced, ethical and sustainable, so they are giving recommendations from a fair perspective. Yet, they are advising also on their own interest, to promote the Norwegian oil industry. This is the game of a governmental organization and it is neither good, nor bad. If your actions will cause harm, it will be negative. Positive otherwise.

Anti-Norway protest in Colombo.
Photo AP

The only anomaly in this series is the role of Sri Lanka: the Norwegian envoy is clearly working with an agenda driven by oil. But in Sri Lanka they allegedly acted as mere neutral observers with a only humanitarian purpose. I’m sure that Norway is advocating transparency and good practices in all the countries it is visiting in its oil for development programme. Therefore I’m sure that they welcome this insight about this activity,they forget to mention. An accidental omission. I consider this quite important for two reasons. First: was the role of Norway dispassionate? Were they working to bring peace amongst Sinhalese and Tamils or their priority was to get their hands on the oil? Their strategy to support the Tamil separatism was for the good of the Tamils or just to have a privileged partnership with a newly created state, which owned everything to them?

The second is that oil is a factor in Sri Lanka. Maybe it is only a secondary one. Yet nobody is discussing it. In the case of Norway, oil probably played a big part. Then it is our duty to investigate more about the connection of oil in the Mannar Basin with the IV Eelam War. Follow us and remember: you heard here for the first time.

1http://www.youtube.com/watch?v=q-nkX22BQ20

2http://www.norad.no/en/about-norad

3http://www.dailyguideghana.com/?p=14300

4http://www.norway-sudan.org/News_and_events/Development-Cooperation/Minister-Erik-Solheim-leaves-office-/

5http://www.chathamhouse.org/media/comment/view/179785

Natural resources and peace-building: Norway and Myanmar

Myanmar opposition leader Aung San Suu Kyi met US foreign secretary HIllary Clinton.
Courtesy Reuters/Cameron

In the last two years Myanmar embarked on a series of reforms that promise to bring democracy and to open up the country. The Burmese people are in desperate need of involvement from the international community, but it is very likely that the first who will come in Myanmar will be the usual suspects. The country is blessed with natural resources, from oil to gems, not to mention its strategic position. In fact China already built port facilities for what the US called “the String of Pearls”. So it is very important to monitor the way investors are coming in Myanmar. In this article¹ , civil society groups express their concern for the pace of development, too fast, with no attention for the humanitarian cost. Norway in particular is leading the way in funding peace-building in community affected area. The head of the Norwegian mission, Mr Petrie declared:

 

Charles Petrie, Head of MPSI in Myanmar.
Courtesy: UN Photo / JC McIlwaine

“The real concern [of activists and civil society groups] is the fact that the political process hasn’t started or has not been developed sufficiently far enough… On the part of government officials, there does seem to be a commitment to dialogue, but I think that some of the groups want a clearer idea of how that is going to proceed,”

According to Petrie, MPSI’s aim is to provide immediate support for the tentative ceasefires through humantiarian relief as well as building trust between the government and ethnic minority communities through development projects. MPSI is funding projects in Rakhine, Chin, Shan and Mon states.²

Petrie criticized severely the government in 2007 and was expelled. His words are an important warning. And everybody should listen, including Norway. Indeed as recently as a couple of weeks ago, Norwegian prime minister Stoltenberg, vowed to strength cooperation about energy, hydropower, oil and gas, fishery and communication³. This angle of the news came from the Chinese agency Xinhua. Other sources are of course highlighting the Norwegian effort in building peace and easing the tension amongst minorities.⁴

Norway’s Prime Minister Stoltenberg visits Burma’s President Thein Sein.
Courtesy Myanmar Government

The lesson is that Norway is coming to Myanmar with a real concern for human rights and a real interest in the country’s natural resources. It is a good way to bring attention for the humanitarian aspect when dealing with economic development. You can call it best practices. Yet the Norwegian endeavour is far from being dispassionate. And we must remember this. Very often the West criticized action of other countries, in primis China, but they rarely debate the fact that we are talking of a competition, that the race for natural resources must be win. And one of your tool can be the humanitarian groups, but it is crucial to recognize that is a tool, for the real purpose of economic exploitation.

Petrie led the internal report on the UN action in Sri Lanka.
Courtesy: Sky News

Otherwise the objectivity of the debate becomes very questionable. It is worth to mention that Petrie issued a very critical internal report against the UN agency in Sri Lanka during the end of the civil war in 2009. The UN intervention in Sri Lanka was a massive failure, missing the very purpose of its presence, namely protecting civilians. So it is more than welcomed the internal review of such misconduct. Yet, the fact that Petrie was appointed to lead the committee raised some question about conflict of interests⁵. Especially if you consider the past involvement of Norway in the Sri Lankan peace process. If you advocate for the principles, then be careful to follow your own preaching.

1http://www.unhcr.org/refworld/publisher,IRIN,,,50a226c82,0.html

2http://www.unhcr.org/refworld/publisher,IRIN,,,50a226c82,0.html

3http://news.xinhuanet.com/english/world/2012-11/04/c_131950031.htm

4http://asiancorrespondent.com/91583/norwegian-pm-pledges-upholding-peacemaking-process-of-burma/

5http://www.irrawaddy.org/archives/16599

India comeback in Sri Lanka: it is false. It never left.

courtesy Qilai Shen/Bloomberg

In the
last report from the Ministry of Finance and Planning, we discovered that China fell out in 4th place as a contributor. More committed to the growth of Sri Lanka you can find Japan and the Netherlands (2nd and 3rd respectively). And of course India in the first place, 13 times more than China. One pillar of the strategic change in the IV Eelam War, leading to the defeat of the LTTE, was China.
The growing interest of Beijing in the region, the String of Pearls, the port in Hambantota, all of these reasons brought military technology, money and political back-up. India had to catch up with China and had to please Colombo in any sort of way. Most of all New Delhi had to swallow the end of Tamil nationalism and the sufferance of brethren Tamil. China and Sri Lanka at the top, imposing conditions on India. This is a caricature,but many thought and felt that this was the right direction to explain what happened.

China did play a role, because it had a major interest in securing its shipping lane. Beijing wanted the port in Hambantota, wanted another Pearl. And it paid for that, also because it needed to boost jobs and investments for its company. President Rajapaksa is a good business man and he saw opportunities. But this is only one part of the story. You forget that China sold weapons, didn’t give them away. Hambantota was a necessity, the rest is a normal business. And if you look at the at the status of foreign debt, you’ll see that Sri Lanka is struggling. Since 2005, the debt ballooned from $11 billion to $24. Sri Lanka didn’t buy cheap its victory. And as you can see, China after reaching his objective didn’t have much more to look after in the island. Chinese have been pragmatic: they wanted something, they paid, the rest, they have been good merchants.

Where is India?

Sri Lanka President, Mr. Rajapaksa and Indian National Congress Leader, Mrs. Sonia Gandhi.

In the last 5 years they allegedly react to the Chinese treat, the containment policy right in their backyard, the domestic issues of the Indian Ocean resolved by China, investments to court Rajapaksa and lure him not to let them down. Or maybe the situation was a bit more complicated. India couldn’t refuse Hambantota (China really considers its energy supply of vital interest). But it was New Delhi that spotted the opportunity. Eliminate a challenge to its prestige, a force that was contesting the paradigm of dominance in the sub-continent. In fact plurality of power within the Indians is a much more severe treat than Beijing expansionism in the region. India had the chance to wipe out the LTTE and silence the Tamils, blaming China. And of course, securing with Rajapaksa a rock solid alliance. The real partner, the long-standing ally of Sri Lanka is India,not China.

Maharaja of Rewa (Now in Madhya Pradesh) – 1877

India played in disguise, when it voted against Sri Lanka in the March 2012 resolution on Human Rights in Geneva: they ‘allegedely’ voted against Sri Lanka, just to mislead how their relationship is closed and how New Delhi supports Colombo. The resolution was watered down, insignificant and bland. It advised Sri Lanka to implement its own procedures, which were irrelevant, and yet not even met. India pushed to a gentle call, which will have no consequences. But it could claim of antagonizing Sri Lanka.

After the storm of 2009, New Delhi is slowly taking its natural position of ruler in Sri Lanka. China will be relegated to the port, the only thing they really care in the island. For everything else you’ll see a dominance of India. Follow the money, money doesn’t lie. And the money says, India is becoming more present and more influential.