- 4 Mannar Basin offshore blocks opened to int’l bidders
- New licensing round to extend into 2027
- Investors to bear exploration, development costs
- Major global energy companies already showing interest
Sri Lanka is hopeful of commencing its first commercial oil and gas production within the next three to five years if exploration under the newly launched offshore licensing round proves successful, according to Ceylon Petroleum Corporation (CPC) Managing Director Dr. Mayura Neththikumarage.
The Government last week formally opened the Sri Lanka Licensing Round 2026 (SL2026-01), offering four offshore exploration blocks covering nearly 34,000 sq km in the Mannar Basin to qualified international energy companies.
Speaking to The Sunday Morning, Dr. Neththikumarage said that the latest initiative differed significantly from previous exploration attempts as it was structured to take successful investors beyond exploration and development and ultimately towards commercial production.
“We expect it to be three to five years to start the first production,” he claimed, explaining that the initial period would involve exploration drilling, evaluation, and development before production could commence.
However, he noted that the timeline could potentially be shortened depending on the results of exploration activities.
Dr. Neththikumarage said that the process would broadly cover three stages – acquisition, development, and production – with companies that successfully established commercially viable resources being able to proceed towards production. “Once this project is done, they have access to commercial production,” he said.
The licensing round, officially opened on Tuesday (25), is expected to run into next year, providing prospective investors sufficient time to study the available geological and geophysical information and prepare their bids.
According to Dr. Neththikumarage, the Government is currently unable to estimate the total investment that could be generated through the licensing round, as expenditure will depend on the exploration and development programmes proposed by individual bidders.
However, he stressed that the financial burden of exploration and development would be borne by the selected companies rather than the Government.
The bids would also be evaluated based on the benefits offered to the State, including financial commitments such as signature bonuses and guarantees.
Dr. Neththikumarage said that inquiries had already been received following the launch of the initiative, including interest from major international players.
He noted that only a relatively limited number of companies globally possessed the technical expertise and financial capacity required to undertake large-scale offshore petroleum exploration and development.
While major companies had approached Sri Lankan authorities, Dr. Neththikumarage said that the Government was directing interested parties through the formal licensing process in order to maintain transparency and ensure a competitive selection process.
The CPC Managing Director identified growing international demand for natural gas as another factor that could strengthen Sri Lanka’s prospects of attracting investors.
Previous exploration efforts had focused more heavily on crude oil, whereas available evidence indicated that Sri Lanka’s prospective offshore areas could hold significant natural gas resources.
With global interest in natural gas having grown, he said that the investment environment was now more favourable for Sri Lanka’s offshore prospects.
Previous exploration in the Mannar Basin has already resulted in gas and condensate discoveries, demonstrating the presence of a working petroleum system and providing evidence of the basin’s hydrocarbon potential. Sri Lanka has had several iterations of ‘we have found oil’ in relation to the Mannar Basin before.
The latest licensing round will also draw on geological and exploration information accumulated through earlier exploration programmes spanning several decades.
Dr. Neththikumarage said that data obtained from previous drilling and exploration campaigns had subsequently undergone further analysis, allowing authorities to develop a more comprehensive dataset and exploration plan for prospective investors.
The Government, through the Petroleum Development Authority of Sri Lanka (PDASL), has offered four offshore blocks under the new licensing round with a combined area of approximately 33,964 sq km.
The four blocks are 2026-MB-01, covering 5,948.95 sq km; 2026-MB-02, covering 5,689.05 sq km; 2026-MB-03, covering 10,597.67 sq km; and 2026-MB-04, covering 11,728.30 sq km.
The acreage stretches across water depths ranging from approximately 100 m to 3,000 m, giving prospective investors access to substantial exploration areas across the Mannar Basin.
The PDASL has described the basin as central to Sri Lanka’s upstream petroleum investment proposition, noting that although previous exploration had established the presence of a working petroleum system, substantial areas remained comparatively underexplored.
The Government expects that international explorers will use modern exploration technologies and interpretation techniques to reassess the basin’s potential.
The latest initiative follows reforms to Sri Lanka’s upstream petroleum sector under the Petroleum Resources Act No.21 of 2021, which established the PDASL as the country’s upstream petroleum regulator and introduced a new institutional framework governing petroleum exploration and development.
Energy Minister Anura Karunathilaka, announcing the licensing round, said that the opening of the four Mannar Basin blocks represented an important step towards developing Sri Lanka’s domestic energy resources.
“The Sri Lanka Licensing Round 2026 marks an important step in the development of our country’s energy resources. We are opening four significant exploration blocks in the Mannar Basin and invite experienced international energy companies to evaluate this opportunity and work with Sri Lanka as long-term partners in the responsible development of our natural resources,” he said.
PDASL Director General Dr. Neil De Silva stated that previous exploration had already established a working petroleum system in the basin.
“The combination of substantial available acreage, technical information, and Sri Lanka’s strengthened regulatory framework provides international explorers with a compelling opportunity to take a fresh look at the basin,” he said.
Official bid documents were issued with the opening of the licensing round last Tuesday, while the data room containing technical information required by prospective bidders is scheduled to become available from next Tuesday (1 September).
The information available to prospective investors will include geological and geophysical data, details of the four exploration blocks, technical material, licensing and participation requirements, and opportunities for direct engagement with the PDASL.
The Government will also take the licensing round to international investors through a roadshow beginning at the World Energies Summit in London on 29–30 September, where the PDASL is expected to present the Mannar Basin opportunity directly to the international upstream petroleum industry.
A virtual investor briefing is scheduled for 21 October, followed by further investor engagement at the Asia Petroleum Geoscience Conference & Exhibition 2026 in Kuala Lumpur on 16–17 November.
Successful bidders will subsequently be notified following the formal evaluation process, after which petroleum resource agreements are expected to be signed.