Colombo, June 6: Sri Lanka has offered Cairns India Ltd the right to explore oil deposits in the northwestern Mannar coastal region and formalities are expected to be completed by June-end, Petroleum Minister A.H.M. Fowzie said on Friday.

"The cabinet has decided to offer block No 1 to India's Cairns Ltd for oil and gas deposits. We are writing to them asking them to come and sign the contract on June 30 in Colombo," said Fowzie.

He said block No 1 is spread over 3,000 square kilometres and Cairns India in expected to invest over $10 million on exploration.

Studies show the Mannar offshore basin has the potential for a million barrels of crude.

The government has decided to float tenders for all the eight blocks identified for oil exploration.

The minister said arrangements have been made to accelerate all activities related to the Mannar project, where exploration is expected to commence by early next year.

Annually, Sri Lanka consumes not less than four million tonnes of fuel products for various purposes and is totally import-dependent.

With oil prices continuing to soar in the world market, the island nation announced a dramatic fuel price revision late last month, raising the price of a litre of petrol and diesel by Rs.30 and a litre of kerosene by Rs.10.

After the latest hike, auto diesel is priced at Rs.110 per litre while super diesel is at Rs.125. The price of 90 octane petrol has gone up from Rs.127 to Rs.157 per litre while 95 octane petrol now costs Rs.170 a litre.

Bus and train fares were increased subsequently amid protests by the opposition parties.

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