Sri Lanka is inviting international energy companies to explore four new offshore blocks in the Mannar Basin, marking the first such initiative under the current government and a renewed push to develop the country's estimated hydrocarbon resources.
Sri Lanka has made four exploration blocks available in the Northwestern Mannar Basin to attract international oil and gas investors, according to Energy Minister Anura Karunathilaka. The Mannar Basin, situated between southern India and northwestern Sri Lanka, is estimated to contain substantial hydrocarbon deposits. A former energy minister previously told parliament in 2021 that the basin may hold around $260 billion worth of oil and gas resources, while government seismic surveys have indicated the presence of over one million barrels of oil in a 30,000 square kilometre area off the north coast.
This represents the government's fresh attempt to develop the sector following an unsuccessful previous effort. Sri Lanka conducted its first international licensing round for petroleum exploration in 2007, awarding one block to an Indian firm that subsequently withdrew due to concerns about commercial viability, despite discoveries of gas and hydrocarbons in the basin. The new initiative is the first under President Anura Kumara Dissanayake's administration and reflects updated scientific data and regulatory frameworks. Officials emphasised that the bidding process remains open to all qualified international companies, with no countries receiving preferential treatment. The four blocks vary in size, ranging from approximately 5,689 square kilometres to 11,728 square kilometres.
Sri Lanka's pursuit of offshore exploration began in the late 1960s with limited success until 2011, when Cairn Lanka discovered significant natural gas deposits in deepwater wells. However, commercial production never materialised due to complex extraction challenges, inadequate domestic infrastructure, and shifting global energy markets, leading Cairn to exit in 2015. To address these obstacles, the country enacted the Petroleum Resources Act of 2021 and established the Petroleum Development Authority to modernise its regulatory environment. These structural reforms aim to attract major international operators and reduce the nation's dependence on coal and oil imports by developing its three main prospective basins: the Mannar, Cauvery, and Lanka Basins.
