Legal challenges have once again stalled Sri Lanka’s efforts to attract international investment in the exploration and commercialization of two blocks totaling over 5,000 square kilometers in the Mannar Basin. The Court of Appeal, in CA (Writ) Application No: 392/2023, acknowledged a prima facie case by Serendive Energy, the petitioner, leading to orders restraining the granting of exploration rights to any third party apart from Serendive Energy for blocks M1 and C1 until a final determination is reached.
Serendive Energy, partnered with a large Indian conglomerate, pursued legal remedies following an attempt in 2023 to reverse the block award previously made to them. They had participated in an international tender in 2019, winning blocks Mannar Basin M1 and Cauvery Basin C1 in May 2021. However, progress was halted during economic crises, leading to attempts to reverse the award, which Serendive Energy argues violates the 2003 Petroleum Act.
Sri Lanka’s oil and gas exploration industry, revitalized in 2003 after earlier setbacks, faces challenges including legal hurdles, economic uncertainties, and a history of nationalization concerns. With the window for leveraging natural resources narrowing due to global environmental targets, investor interest remains low. The recent legal gridlock adds to the industry’s uncertainties, potentially impacting the country’s exploration prospects in the coming years.