Sri Lanka has announced the launch of a new licensing round, offering four offshore blocks in the Mannar Basin to international companies for exploration.

Economic Context

The country’s economy, which previously suffered from a prolonged civil war, is now seeking to boost the search for its own hydrocarbon resources through this application round. The new licensing phase is seen as a significant step in Sri Lanka’s long-term efforts to establish its own oil and gas industry, especially since previous exploration attempts did not result in commercial production.

Licensing Details

The Petroleum Development Authority of Sri Lanka (PDASL), the national upstream regulator, has announced the launch of a licensing round for four blocks in the Mannar Basin, with water depths ranging from 100 to 3,000 meters. The MB-01, MB-02, MB-03, and MB-04 blocks together cover an area of approximately 33,964 square kilometers.

Applications opened on August 25, and a data room for investors will be available from September 1. The Mannar Basin is considered a central element of the country’s upstream investment offering. Previous studies in the region have confirmed the presence of an active petroleum system and led to the discovery of gas and condensate, highlighting the basin’s potential.

Investment Opportunities

A significant portion of the Mannar Basin remains underexplored, creating opportunities to apply modern exploration technologies and new data interpretation methods. As part of the licensing round, potential investors are provided with geological and geophysical information, enabling them to conduct a detailed technical assessment of the offered blocks.

This phase follows the reform of the country’s upstream sector, which included the adoption of the Petroleum Resources Act in 2021. This law established PDASL as the national regulator and strengthened the institutional framework for exploration and development of petroleum resources.

History of Exploration in the Mannar Basin

In 2011, the British company Cairn Energy discovered gas in the deepwater M2 block of the Mannar Basin, raising hopes for promising reserves. However, commercialization of these discoveries did not occur due to the absence of a domestic gas market and viable offtake agreements. Subsequently, Cairn Oil & Gas (now Vedanta Oil & Gas) relinquished the M2 block after two gas finds located 40 kilometers apart.

The combined gas reserves at the Dorado and Barracuda fields are estimated at 1 trillion cubic feet of gas and 10 million barrels of condensate. The main reasons for relinquishing the block were limitations in the development program and insufficient political support.

Over the past decade, efforts to attract investors to the Mannar Basin assets have not resulted in the emergence of an operator for the deepwater block.