The launch of Sri Lanka's latest offshore oil and gas licensing round for the Mannar basin is in doubt, having missed two announced launch dates in November and December. The fate of this planned 2025 round is now uncertain as the year ends, with no official communication from the Petroleum Development Authority of Sri Lanka (PDASL) regarding delays or cancellation.

Licensing Round Details and Target

The round, announced by the Energy Minister in July, was expected to offer four assets. PDASL's target investors are large and medium-sized companies with proven deepwater exploration experience and the requisite technical and financial capabilities. The proposed bid submission date was tentatively set for 30 May 2026.

Marketing and Advisory Efforts

Earlier this year, PDASL issued a request for proposal for a marketing consultant to promote the licensing round, with the assignment expected to last until June 2026. While the results of this selection are not publicly confirmed, it is understood that advisory firm Wood Mackenzie is not involved with the Sri Lankan administration on this matter.

History of Exploration Attempts

Sri Lanka's offshore exploration history is marked by multiple false starts. Its first international licensing round was in 2007. Cairn (now part of Vedanta) made two gas discoveries in the Mannar basin's Block M2 in 2011, but these were not developed due to high costs. Subsequent attempts to relicense this block since 2017 have been unsuccessful. In 2019, TotalEnergies and Equinor studied blocks off the east coast but later exited due to unfavorable market conditions during the pandemic.

Legislative and Strategic Developments

A new Petroleum Development Act was enacted in 2021. Following acute fuel shortages in 2022, the government was determined to reform the upstream sector to attract foreign capital. In 2023, it finalized a legal framework for offshore investments, designating 900 offshore blocks to be opened to international companies under a strategy combining licensing rounds and joint study agreements.

Recent Projects and Challenges

Other energy developments include a definitive agreement with New Fortress Energy for an LNG terminal off Colombo, though no progress has been announced since signing, and Sinopec's plans for a major refinery in Hambantota by 2028. However, new challenges threaten investor confidence. There have been public protests against proposed energy projects in the Gulf of Mannar, including a 105-day protest on Mannar Island against wind power projects that only ended after a presidential assurance. The Adani Group withdrew from a Mannar Island wind project in February, citing financial unviability and legal challenges from environmentalists.