India's petroleum minister opened Indian Oil Corp's first petrol station in Sri Lanka on Wednesday after offering to help the island explore oil off its shores.

Tiny flags with the Indian Oil logo fluttered in the breeze as Minister Ram Naik opened the spacious station that includes a convenience store and an automatic teller machine -- services not found at other fuel stations in the island.

Indian Oil bought 100 petrol stations from state-run Ceylon Petroleum Corp and plans to acquire 150 more -- an investment that is the outcome of closer ties between the two governments as Sri Lanka tries to end a 20-year ethnic war with Tamil Tiger rebels.

Petrol stations in the island usually offer just basic services, with prices set by the Ceylon Petroleum, and Indian Oil is expected to follow its lead on prices for the time being.

IOC plans to spend $100 million over the next few years on petrol stations and is also looking at supplying liquefied petroleum gas and aviation fuel.

"We are building an energy bridge," Naik said.

"We are offering technical know-how if they want to explore oil on their own, or, if they allot us blocks, we will certainly develop it," he said.

Oil exploration could be undertaken by India's largest oil explorer, Oil and Natural Gas Corp, he said.

"This is one of the subjects I will be speaking about with the prime minister," he said, referring to a meeting with Sri Lankan Prime Minister Ranil Wickremesinghe.

Indian firms have acquired stakes in oil fields in Sudan, Russia, Egypt, Iran and Vietnam as part of building an oil security network, he said.

Norway's TGS Nopec is expected to begin a second phase of seismic surveys off the island's northwestern coast later this year after initial surveys were encouraging.

Sri Lanka imports about 15 million barrels of crude oil a year and has a refining capacity of 2.2 million tonnes.

IOC currently supplies 30,000 tonnes of diesel and 10,000 tonnes of jet fuel a month under a one-year $100 million term contract that ends in September.

IOC has said it was expecting to renew the contract that covers about 40 per cent of Sri Lanka's import needs.