Sri Lanka, which doesn’t pump any oil at present, hopes to accelerate oil and natural gas exploration by issuing licences for around 900 offshore blocks for foreign firms with the introduction of new regulations this year, a senior government official said.
The aim is to allow foreign firms to scout for energy resources and bring in vital investments to the crisis-hit country, he disclosed.
According to the government of Sri Lanka, seismic data shows there could be more than 1 billion barrels of oil in the Mannar Basin.
The Mannar Basin, which lies between southern India and northwestern Sri Lanka, may hold around $260 billion worth of oil and gas resources.
Starting up oil production is part of President Ranil Wickremesinghe’s plan to attract foreign investment as he seeks to stabilise the economy amid the country’s worst economic crisis in seven decades.
Sri Lanka is preparing to issue two-year oil and gas exploration licenses to expedite the oil exploration process in the island.
The new regulations were finalised by the government soon and set a framework for companies to sign an expression of interest (EOI) for exploring offshore assets around the country, Surath Ovitigama, director general of the state-run Petroleum Development Authority revealed.
In the coming months the authority expects to recommence oil and gas exploration with the first set of credible entities to boost investor confidence and serve to attract the next calls for EOIs this year .
Previous attempts by Sri Lanka to start up oil production have mainly focused on the country’s northern coast but this time the government has mapped assets surrounding all sides of the island.
The Mannar Basin, which lies between southern India and northwestern Sri Lanka, may hold around $260 billion worth of oil and gas resources, Sri Lanka’s former energy minister told parliament in 2021.
Sri Lankan authorities hope that exploration work could start as early as March and any success in the initial exercise will lead to production sharing agreements for gas and oil,
Two companies have already expressed serious interest and requests for proposals (RFPs) will be issued shortly, leading to negotiations for exploration licenses, he said.
However, a source with direct knowledge of talks said ONGC Videsh Limited (OVL), the overseas arm of India’s state-run oil explorer, is a front runner seeking to explore multiple blocks off Sri Lanka’s north and north-west shoreline.
“OVL is the company that has made the most efforts, appealed the most and has followed up with meetings. They have made representations at every level,” the source said, asking not to name because discussions were confidential.
