In a significant development, state-run Oil and Natural Gas Corporation Videsh Limited (OVL), after having evinced keen interest in bidding for hydrocarbon reserves in Mannar and Cauvery basins, has opted out of bidding for any of the 13 oil and gas blocks in Sri Lanka.

However, private sector energy major Cairn India has put in a bid for one block. Officials in OVL said it had decided against participation in this round of auctions in Sri Lanka as it did not find the prospects of these blocks very viable. The bids for 13 offshore exploration blocks offered in the Sri Lankan Licensing Round, only the second in its history, closed on November 29. Only three bids have been received at the close by Sri Lanka's Petroleum Resource Development Secretariat (PRDS) as major oil and gas giants excluding Cairn India stayed away, officials in the Petroleum Ministry said in New Delhi.

Reports said Cairn had bid for a block in Mannar basin while OVL skipped the round. Singapore-based Bonavista Energy Corp bid for two blocks in the Cauvery basin located offshore Jaffna in the North. OVL had expressed interest in three blocks M3, M5 and M6 in the Mannar basin but did not make an offer due to its assessment of poor prospects. Cairn bid for M5 block and Bonavista bid for Cauvery Blocks C2 and C3. PRDS had offered 13 blocks in the Cauvery and Mannar basins. Cairn already has a block in Mannar basin where it has made two gas discoveries. It had won the block in Sri Lanka's first licensing round in 2007 by defeating OVL and Niko Resources of Canada.

PRDS is the government agency responsible for overseeing all petroleum exploration and production-related activities in Sri Lanka. The Island nation does not currently produce oil or gas and spent $5 billion on imports in 2012. Besides the 13 shallow water blocks, Sri Lanka has also offered six ultra-deepwater blocks off the southeastern coast for a joint study with PRDS to establish their hydrocarbon potential.

Interestingly, OVL had approached the Ministry of External Affairs last month for permission to take part in the second round of bidding for oil and gas blocks in Sri Lanka. “We have approached the MEA for clearance as it has been instrumental in the past in working with the Sri Lankan authorities to ensure India is a part of the bidding process for the oil and gas blocks being offered by Colombo in the Cauvery and Mannar basins. It is important that OVL and other Indian oil companies take active interest in the hydrocarbon sector of Sri Lanka, keeping in mind the strategic importance and location of the island nation,’’ a Petroleum Ministry official had stated.