FINANCIAL CHRONICLE – Sri Lanka has announced the opening of four offshore blocks in the Northwestern Mannar Basin for international investors, marking a renewed effort to boost investments in the oil and gas sector after a previous unsuccessful attempt due to unviable production prospects.
The Mannar Basin, situated between southern India and the northwestern coast of Sri Lanka, is believed to harbor oil and gas resources valued at approximately $260 billion, according to statements made by a former energy minister in the Sri Lankan parliament in 2021.
This initiative represents the first exploration endeavor under the administration of President Anura Kumara Dissanayake. Based on seismic studies conducted in the past, previous administrations have projected that an area of around 30,000 square kilometers off the northern coastline may contain over one million barrels of oil.
Submit Your Press Release
Get your company news, announcements, launches, appointments and events in front of a wider audience.
Energy Minister Anura Karunathilaka remarked, “We are launching four major exploration blocks in the Mannar Basin and welcome experienced international energy firms to assess this opportunity and collaborate with Sri Lanka as long-term partners in the sustainable development of our natural resources.”
Sri Lanka initiated its first international licensing round for oil exploration in 2007, during which one block was granted to an Indian company that later withdrew due to concerns regarding the commercial feasibility of oil production, despite the detection of gas and hydrocarbons within the Mannar Basin.
“With the new scientific data available, we believe it is time to advance with determination and clarity of purpose. We are confident that history will not repeat itself,” Karunathilaka stated.
Among the four blocks, the second is the smallest, covering an area of 5,689.05 square kilometers, while the fourth is the largest, spanning 11,728.3 square kilometers.
In 2007, exploration blocks were allocated to China and India on a nomination basis. However, officials have indicated that this time, there are no predetermined allocations for any specific countries.
“No one is excluded from participating in the bidding process,” stated Neil De Silva, the Director General of the Petroleum Development Authority of Sri Lanka (PDASL).
Sri Lanka’s quest for offshore oil and gas exploration began in the late 1960s, initially targeting shallow waters in the Gulf of Mannar and the Cauvery Basin. Early drilling efforts saw limited success until 2011, when Cairn Lanka, a subsidiary of Cairn India at the time, discovered significant natural gas reserves in two offshore wells in the deepwater Mannar Basin.
These discoveries confirmed the existence of commercially viable natural gas and condensate deposits; however, challenges related to deepwater extraction, inadequate domestic infrastructure for natural gas, and fluctuations in the global energy market hindered the establishment of commercial production, prompting Cairn to exit the block in 2015.
After several years of inertia, Sri Lanka revamped its regulatory framework by implementing the Petroleum Resources Act of 2021 and establishing the Petroleum Development Authority of Sri Lanka (PDASL) to oversee exploration rights and update offshore block maps.
In a bid to rejuvenate foreign investment and reduce its heavy dependence on coal and oil imports, the nation introduced new joint-study regulations and restructured its licensing frameworks. These initiatives are designed to attract major international oil and gas companies to explore and develop the estimated hydrocarbon potential across its three key sedimentary basins: Mannar, Cauvery, and Lanka Basins. (Colombo/August 25/2026)
