Offshore oil rig
An offshore oil rig. The Obama administration paved the way for offshore oil drilling on the East Coast on July 18, 2014. Reuters

Amid mounting speculation of potential oil reserves in Sri Lanka's seawaters, Indian media reports have suggested that India might be looking for greater involvement, overstepping China and Russia, who are also believed to be interested in oil exploration deals with the island nation.

Sri Lankan government, meanwhile, remained confident that traces of petroleum in its waters will have commercial value in the world crude oil market, according to a BBC report.

According to a report in The Hindu, India is urging Sri Lanka to allocate oil exploration blocks in waters that separate them as it considers the location too strategically important to allow companies from other nations to base themselves in this area.

Moreover, India expects a favorable stance from Colombo for having supported Sri Lankan troops in annihilating the LTTE (Liberation Tigers of Tamil Eelam) militants in a war that ended in 2009.

It is believed that India has developed an interest in Sri Lankan venture especially because it was Cairns Lanka, a wholly-owned subsidiary of the private company Cairn India in which Cairn UK has a minority holding, which struck oil in the block allocated for exploration in the Mannar basin.

However, Sri Lankan media have questioned India's stance in persuading Colombo for exclusive partnership, since New Delhi had rejected Sri Lanka's offer to explore the two remaining blocks during the height of the war.

While Russian or Malaysian involvement in Mannar basin may not be politically tricky for the Indian government, India's somewhat strained relationship with China is being regarded as a driving factor for the former which requires Beijing out of the picture. Reports suggest that New Delhi would not like to court adverse publicity at home if Chinese companies got lucky in the Sri Lankan waters.

ONGC Videsh is in talks with Cairns about prospects of buying its stake in a Mannar block, and has asked Colombo for allocation of adjacent blocks. Sri Lankan government has been delaying auctions of the remaining blocks telling India that it will wait for the results of the ongoing exploration.