Sri Lanka will invite bids from international companies later this month for upstream petroleum development in four blocks of the Mannar Basin, the Daily Mirror reported on Saturday.
The tender covers exploration and extraction of both oil and natural gas. The newspaper said the process had been in the planning stage for a long time but did not proceed because of a court case, and that a source told it all legal impediments have now been cleared for the tender to be called.
Consultancy appointed to run the process
The government earlier invited tenders to select a consultancy firm with the expertise to manage the international bidding process for upstream petroleum development.
A 2021 release from the Parliamentary Media Unit put the value of oil and gas resources in the Mannar Basin at around US$267 billion. Cairn Lanka Limited, a subsidiary of an Indian firm, drilled two exploration wells in the basin in 2011 and discovered natural gas in the Barracuda and Dorado fields.
Regulatory groundwork already laid
Sri Lanka gazetted a national policy on natural gas in September 2020 setting out strategies to create domestic demand and giving operators options to commercialise offshore gas. The Petroleum Resources Act No. 21 of 2021 followed, establishing the framework to regulate exploration and production.
Regional push for offshore reserves
The Daily Mirror noted that tension in West Asia has prompted countries across South and Southeast Asia to step up offshore exploration. India’s Union Cabinet, meeting under Prime Minister Narendra Modi, approved a national offshore exploration scheme known as Samudra Manthan with a budget of US$8.83 billion through the 2030-31 financial year. Bangladesh has also invited bids from international companies for oil and gas exploration.
No date has been announced for the opening of bids, and the report did not name the blocks to be offered.
Update: PDASL to detail the licensing round on August 25
The state-run Petroleum Development Authority of Sri Lanka will announce the details of a new licensing round for offshore oil and gas exploration on Tuesday, August 25, EconomyNext reported on Sunday. That supplies the date this article noted was missing.
The authority described the round as “a strategic initiative to invite global energy companies to explore and produce oil and gas offshore Sri Lanka”, and said the launch would take place this year.
It also stated a firmer position on what has already been found than the earlier reporting did: “Exploration work done up to date has confirmed the presence of viable gas accumulations offshore west coast. Timely development of these resources would ensure energy security to the nation as well as it would be a catalyst for its industrial growth.”
The scope described by PDASL is broader than the four Mannar Basin blocks reported in August. The authority’s remit covers three prospective sedimentary basins — Mannar, Cauvery and Lanka — and the licensing framework is aimed at commercialising hydrocarbon potential across all of them. Neither report states whether the four-block tender forms part of the wider round or runs separately.
EconomyNext set out the history behind it. Offshore exploration began in the late 1960s in the shallow Gulf of Mannar and Cauvery Basin, with limited technical success until 2011, when Cairn Lanka discovered significant gas accumulations in two deepwater Mannar Basin wells. Commercial production never followed — deepwater extraction proved complex, Sri Lanka lacked domestic natural gas infrastructure, and global energy markets shifted. Cairn exited the block in 2015.
The Petroleum Resources Act of 2021 and the creation of PDASL followed that stagnation, giving the country a regulator to manage exploration rights and update offshore acreage block maps. New joint-study regulations and licensing frameworks were introduced to revive foreign investment and reduce reliance on imported coal and oil.
