It is now official. An agreement between the Sri Lankan government and Cairn Lanka, an entity coming under the umbrella of Cairn India and holding the license for petroleum exploration in the Mannar basin, will come to an end by October.

On Wednesday, the Sri Lankan Cabinet decided to float fresh global bids to choose an investor for commercially developing natural gas deposits in the Mannar basin. Rajitha Senaratne, Cabinet spokesperson, revealed the decision of the government at a press conference here on Thursday.

According to the website of the Cairn Lanka (http://www.cairnlanka.com/about-us), the pact, called Petroleum Resources Agreement, was signed in July 2008 between the government and the Cairn India.

An official document states that the termination of the agreement has been necessitated by the “policy decision” of the Cairn India not to go ahead with further exploration, after drilling four wells, three in 2011 and one in 2013. Natural gas was discovered in two wells, which were estimated to have the recoverable volume of around 60 billion cubic metres. The Cairn Lanka had spent $ 230 million for the exploration.

It is that easy to get investors for gas development project in a deep area such as the Mannar basin due to the prevailing price slump in the world market.

Keeping this in mind, the terms and conditions of the existing agreement will broadly be retained, according to the document.

A negotiation committee would also be constituted, Dr. Senaratne added.