The survey which was carried out in 2009 was intended to investigate the petroleum potential of two gravity anomalies indicated by satellite off the Southern coastal belt of Sri Lanka, the 2009 Performance report of the Ministry of Petroleum Industries said.

Sri Lanka has identified and demarcated 12 blocks vis-à-vis three in the Cauvery Basin (off North East coasts of Sri Lanka), eight in the Mannar Basin (off Western and North Western Coasts) and one in the Southern Basin (off Hambantota).

According to the Petroleum Resources Development Secretariat, oil exploration in Sri Lanka started in early 1970s and continued until the mid 1980s, when seven wells were drilled offshore northwest.

Sri Lanka has eight oil and gas exploration blocks in the northwestern Mannar basin, two of which have been granted to the governments of China and India.

Following discussions between President Mahinda Rajapaksa and Russian Gas and Oil company Gazprom in February this year the Russian government has agreed to start oil and gas exploration in the seas off Mannar.

Sri Lanka will call international tenders for the rest five blocks within this year.

A Petroleum Resources Agreement was singed in 2008 between Cairn India and the government to explore and produce hydro - carbon and natural gas in the Mannar Basin in Northern Sri Lanka.

According to the Petroleum Resources Agreement, Cairn Indian Ltd will start exploration activities in Block SL2007/01/001 in the Mannar Basin which covers 3,400 sq. km. at depths between 200 to 1,800 meters.

The Exploration license is valid for eight years and divided into three stages of three, two, and three years. The Government of Sri Lanka will receive all exploration data, and the Contractor will be required to support education and training of staff, support environmental studies and transfer related technology to Sri Lanka.

In 2009 the Company commenced its 3 D seismic survey in the Mannar Basin. The programme will fulfil the commitment of 1450 km of 3 D seismic data acquisition and will be acquired by CGG Veritas AS using the seismic vessel “SR/ V Viking II.

Once the data acquisition is completed drilling will proceed in early 2011.

Sri Lanka, which produces no crude oil of its own, refines 60 per cent of its fuel requirements while the remaining 40 per cent of its oil products needs are imported from countries such as Malaysia and Saudi Arabia at $700 million a year, officials said.