Sri Lanka Oil and Gas Market Overview
Sri Lanka’s oil and gas market plays a crucial role in the country’s energy security, economic stability, and infrastructure development. As an island nation with limited indigenous hydrocarbon resources, Sri Lanka is highly reliant on imports to meet its oil and gas requirements. Petroleum is predominantly used in transportation and power generation, while liquefied petroleum gas (LPG) is commonly used for domestic cooking and industrial purposes. The energy market is overseen by the Ministry of Power and Energy, with Ceylon Petroleum Corporation (CPC) playing a central role in crude imports, refining, and retail distribution. Over the past decade, recurring fuel shortages and balance-of-payment issues have exposed vulnerabilities in Sri Lanka’s supply chain. The government continues to seek long-term supply agreements, refinery upgrades, and policy reforms aimed at enhancing energy security. There is growing interest in exploring offshore oil and gas potential, particularly in the Mannar Basin, though commercial development remains elusive. Amid rising demand and economic recovery efforts, the country is also exploring cleaner alternatives, including LNG imports, to diversify its energy mix and reduce carbon emissions in the long run.
Sri Lanka does not currently have any significant upstream oil or gas production, though exploratory activities have been undertaken in the Mannar Basin. Despite some promising seismic data and past exploratory drilling by international companies, no commercially viable reserves have been confirmed to date. The upstream sector remains underdeveloped, awaiting further investment and policy clarity. In the midstream segment, the Sapugaskanda Oil Refinery near Colombo is the country’s only refining facility, operated by CPC. It processes imported crude oil and supplies a significant share of the country’s petroleum needs. However, the refinery is operating under capacity constraints and requires modernization to process a wider range of crude grades. Midstream infrastructure is also supported by a network of pipelines and storage terminals at key ports such as Colombo and Trincomalee. In the downstream segment, distribution of refined products and LPG is handled primarily by CPC and Lanka IOC, a subsidiary of Indian Oil Corporation. These entities manage extensive retail networks across the island. Efforts are ongoing to expand fuel retail infrastructure, improve pricing transparency, and support fuel diversification with cleaner alternatives such as LNG and electric vehicle adoption.
Sri Lanka Oil and Gas Market Latest Developments
In August 2024, the first 220 MW phase of the Sobadhanavi LNG-fired combined-cycle power plant at Kerawalapitiya was commissioned, marking Sri Lanka’s operational entry into LNG-based electricity generation.In February 2025, the Sri Lankan government relaunched its LNG terminal project, initiating a fresh round of tenders and strategic planning to establish the country’s first LNG import infrastructure, with target commissioning by 2028.
In April 2025, Sri Lanka signed a strategic partnership framework with India and the UAE to develop an integrated energy hub in Trincomalee, including plans for bunkering, storage, pipeline corridors, and a potential multi-fuel refinery.
In May 2025, Sri Lanka’s Cabinet approved the opening of four new offshore oil and gas blocks in the Mannar Basin for international exploration, with consultants hired to manage licensing and investment attraction.
Petronet LNG of India confirmed that LNG shipments to Sri Lanka will continue through 2025, with plans to deploy a floating storage and regasification unit (FSRU) to support the country’s growing LNG-fired power capacity.
The commissioning of the Sobadhanavi LNG plant represents a significant pivot toward cleaner fuels in Sri Lanka’s power sector, reducing its reliance on costly diesel and furnace oil.
Expansion of LNG capacity through a second plant phase and eventual FSRU deployment aligns with Sri Lanka’s long-term vision to adopt gas as a transitional fuel in its energy mix.
The revival of the LNG terminal tender underscores a strategic commitment to infrastructure development, aimed at energy security and import diversification.
The India–UAE partnership in Trincomalee positions Sri Lanka as a potential regional energy hub, improving access to refined fuels, storage, and port-linked energy logistics.
Offshore exploration in the Mannar Basin reflects a renewed push to discover domestic hydrocarbon reserves, previously delayed due to political and legal uncertainties.
Petronet LNG’s sustained engagement demonstrates deepening energy cooperation between India and Sri Lanka, particularly in gas infrastructure and long-term supply planning.
Use of FSRU technology offers Sri Lanka a quicker and more flexible pathway to importing LNG, while reducing capital and time burdens associated with onshore terminals.
The Trincomalee project is strategically significant, providing a geopolitical counterbalance to Chinese investment in Hambantota and improving supply chain resilience.
While petroleum imports still dominate the market, LNG adoption and potential upstream success could reduce foreign exchange pressure in the medium term.
The developments in 2024–2025 collectively mark a shift in Sri Lanka’s energy policy from emergency fuel procurement to long-term planning focused on sustainability, diversification, and regional collaboration.
Sri Lanka Oil and Gas Market Report Scope
The "Sri Lanka Oil and Gas Strategic Analysis and Outlook to 2032" is an all-encompassing report that delivers a full-spectrum evaluation of the nation’s oil and gas value chain—from exploration and production fields, refinery and LNG plant operations, to midstream pipelines and storage infrastructure in Sri Lanka. Leveraging robust methodologies and proprietary databases, the study provides detailed asset-level data, historic and forecasted supply-demand trends (2015–2032), and a clear understanding of how recent developments, government policies, and market dynamics shape the sector. The Sri Lanka Oil and Gas report equips industry stakeholders with actionable insights for investment, benchmarking, and strategic planning by profiling operational assets, new projects, and the competitive landscape across upstream, midstream, and downstream segments.
Comprehensive market analytics are complemented by SWOT and investment opportunity analysis, highlighting growth drivers, operational risks, sector-specific challenges, and capital requirements. The study evaluates key companies’ strategies, performance, and market positions, providing an integrated view of where opportunities and bottlenecks exist. The scope extends to Sri Lanka field-wise production, refinery-wise capacity, LNG terminal operations (including liquefaction and regasification units), and product flows through pipelines and storage. The research not only answers core market questions but also uncovers the evolving dynamics that will influence the future trajectory of Sri Lanka country’s oil and gas industry.
- Sri Lanka Asset-by-asset data covers all existing and upcoming oil and gas fields, refineries, LNG terminals, pipelines, and storage facilities, providing a granular view of national infrastructure.
- Historic and projected supply-demand analysis for crude oil, natural gas, and key refined products (gasoline, diesel, LPG, fuel oil, etc.) from 2015 to 2032.
- Recent developments, regulatory changes, and major project announcements are analyzed for their impact on market fundamentals and investment climate.
- Segmented insights into upstream (exploration and production), midstream (pipelines, LNG, storage), and downstream (refining, distribution) operations.
- Comprehensive overview of LNG sector including liquefaction and regasification terminals, contracted versus available capacity, and future outlook.
- Sri Lanka Oil and Gas Industry SWOT analysis and sector-wise benchmarking to evaluate industry strengths, challenges, opportunities, and potential risks.
- Sri Lanka Investment analysis detailing sector growth potential, required capital for new projects, and feasibility of ongoing and planned developments.
- Competitive landscape profiling of leading companies, with business strategies, operational performance, and market shares.
- Infrastructure benchmarking by market concentration in pipelines, refining, LNG, and storage segments, including capacity and utilization rates.
- Answers to key market questions, including evolving Sri Lanka supply-demand dynamics, project status, leading market participants, and the future outlook for capacity, trade, and investment.
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FAQ's
The Sri Lanka Oil and Gas report provides comprehensive intelligence from upstream to downstream—covering exploration blocks, field-level production, refinery operations, LNG terminals, and supply-demand analytics. It empowers executives and investors with actionable insights to assess risks, evaluate opportunities, and optimize Sri Lanka market entry or expansion strategies.
Yes, the report presents detailed data and analysis for all relevant segments present in the country—whether upstream (exploration and production), midstream (LNG terminals, storage facilities, pipelines), or downstream (refineries). This sector-specific granularity ensures accurate benchmarking, planning, and forecasting tailored to the Sri Lanka oil and gas infrastructure.
With detailed coverage of exploration opportunities, trade contracts, regulatory frameworks, and infrastructure projects, the Sri Lanka oil and gas report serves as a critical tool for stakeholders formulating investment strategies, negotiating partnerships, or aligning with national energy policies.
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