Sri Lanka’s Ministerial Consultative Committee on Energy Affairs has sanctioned the solicitation of investment proposals aimed at the exploration and development of the country’s petroleum resources, as announced by the parliament on Thursday.
In a renewed effort to draw foreign investment into the sector, Sri Lanka recently made four offshore blocks in the Northwestern Mannar Basin available for international investors to investigate oil and gas potential. This initiative follows an earlier unsuccessful attempt due to the commercial unviability of production.
According to a former energy minister in Sri Lanka, the Mannar Basin, located between southern India and northwestern Sri Lanka, is estimated to contain petroleum and natural gas resources valued at approximately $260 billion. This new venture marks the first exploration effort under the administration of President Anura Kumara Dissanayake.
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Seismic surveys conducted by previous administrations have suggested that over one million barrels of oil resources may lie within a 30,000 square kilometer area off the northern coast of the island.
The recent endorsement from the Ministerial Consultative Committee on Energy is crucial for formalizing the process of resource exploration. “Under this order, any individual or entity interested in exploring or developing petroleum resources in the identified blocks must submit an investment proposal along with the specified administrative fee in the invitation for bids,” the parliament stated.
Sri Lanka’s efforts to explore offshore oil and gas resources date back to the late 1960s, initially concentrating on shallow waters in the Gulf of Mannar and the Cauvery Basin. Early drilling attempts yielded minimal success until 2011, when Cairn Lanka, a subsidiary of Cairn India at the time, identified significant natural gas reserves in two offshore wells in the deepwater Mannar Basin. This discovery confirmed the existence of commercially viable natural gas and condensate.
However, due to the complexities of deepwater extraction, insufficient domestic infrastructure for natural gas, and fluctuations in the global energy market, commercial production did not commence, leading Cairn to withdraw from the block in 2015.
After a period of stagnation, Sri Lanka took steps to modernize its regulatory framework by passing the Petroleum Resources Act of 2021 and establishing the Petroleum Development Authority of Sri Lanka (PDASL) to oversee exploration rights and revise offshore block maps.
To stimulate foreign investment and reduce its heavy dependence on coal and oil imports, the country has implemented new joint-study regulations and developed structured licensing frameworks. These initiatives are designed to attract major international oil and gas companies to explore and capitalize on the estimated hydrocarbon potential in its three main sedimentary basins: the Mannar, Cauvery, and Lanka Basins.
