Sri Lanka showing renewed interest in Oil and Gas exploration

Interest in oil and gas exploration in Sri Lanka is showing signs of rebounding, according to oil and gas analysts at BMI Research.

“After years of muted exploration activity amid a global oil price downturn, appetite for oil and gas exploration in Sri Lanka is gradually returning, alongside stronger prices and improving market fundamentals,” the analysts said.

“In May 2018, Sri Lanka's Petroleum Resources Development Secretariat announced the signing of several 2D and 3D seismic acquisition deals with Total and Schlumberger to assess the commercial potential of its offshore blocks along the east coast and in the Mannar basin,” the analysts added. 

“Any commercial discoveries would take Sri Lanka a step closer to commencing its first oil and gas production,” they continued.

BMI said Sri Lanka’s desire to produce its own oil and gas “largely” stems from the need to improve energy security and manage a “hefty” fuel import bill.

“The country spent $3.5 billion on crude oil and refined fuels imports in 2017, an increase of 40 percent year-on-year, and equivalent to 4 percent of the GDP,” the analysts said.

Government efforts to attract more upstream investment have been “stymied” to date by a combination of low oil prices, regulatory issues, limited availability of seismic data and competition from other upstream markets in the region, according to BMI.