Sri Lanka is reportedly preparing to issue two-year oil and gas exploration licenses for as many as 900 offshore blocks for foreign firms to scout for energy resources and bring in vital investments to the country.
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.
The Reuters News Agency quoted a top official as saying, the new regulations were finalised by the government this week and set a framework for companies to sign an expression of interest (EOI) for exploring offshore assets around the country.
Director General of the Petroleum Development Authority Surath Ovitigama told Reuters that the rules for oil exploration will be made public this month and the government hopes to start issuing licences for some of the 900 blocks within weeks.
He has said, “In the coming months we expect to recommence oil and gas exploration with the first set of credible entities. We believe this will boost investor confidence and serve to attract the next wave of 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.
Ovitigama has said, “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.”
The Reuters reported that two companies have already expressed serious interest and requests for proposals (RFPs) will be issued shortly, leading to negotiations for exploration licenses.