The Russian government has agreed to sell oil to Sri Lanka at a fixed price through Gazprom a major oil company in Russia, sources at the Russian embassy told Daily Mirror online.

At the moment Sri Lanka is buying oil through Singapore. The deal between Russian and Sri Lankan is likely to be finalized during the course of the year embassy sources confirmed.

Gazprom also held discussions with visiting Sri Lanka president Mahinda Rajapaksa last month on exploring for oil off the coast of the Indian Ocean island.

Cairn India, a private oil firm, has already bought one oil exploration block off Mannar in Sri Lanka's north western coast through an open auction.

In December, it began three-dimensional seismic surveys to pinpoint sites for test drills later on in the Gulf of Mannar waters off Sri Lanka's north-west.