Sri Lanka will begin a new licensing programme today (25) to invite bids for the exploration and development of petroleum and natural gas resources in its territorial waters, the Petroleum Development Authority of Sri Lanka said.
Accordingly, international energy companies will be invited to submit bids for the exploration and development of Sri Lanka’s petroleum resources.
The main objective of the bidding process is to attract global energy companies to explore and produce oil and natural gas in Sri Lanka’s offshore areas.
Exploration carried out so far has confirmed the presence of potentially commercially viable natural gas deposits off the western coast. Developing these resources is expected to strengthen the country’s energy security and support industrial growth.
Further details regarding the licensing process are expected to be announced at a media briefing scheduled for today.
Sri Lanka’s oil exploration efforts date back to the late 1960s. Significant progress was made in 2011 when Cairn Lanka drilled two wells in the Mannar Basin and discovered natural gas in the Barracuda and Dorado fields.
The government plans to invite investment proposals for exploration and production activities in four blocks in the Mannar Basin. Cabinet approval for the bidding process was granted in May 2025, following which the Petroleum Development Authority began promoting the opportunity among potential international investors.
The process had previously been delayed due to legal proceedings. However, according to recent reports, the legal obstacles have been cleared, allowing authorities to proceed with the international bidding process.
Sri Lanka has also established a legal framework for petroleum exploration and production through the Petroleum Resources Act No. 21 of 2021.
In addition, a National Policy on Natural Gas was gazetted in 2020 to provide opportunities for investors to develop domestic demand and commercialise offshore gas resources.
A 2021 parliamentary estimate placed the potential value of oil and gas resources in the Mannar Basin at around US$267 billion. However, this figure represents the overall potential of the resources rather than proven reserves that can definitely be commercially extracted.
