The agreement was reached between Iranian Vice-Minister for International Affairs Muhammad Khazaee and Sri Lanka's Energy Minister Karu Jayasuriya in Colombo on Wednesday.
Details of the financial package will be worked out by officials on both sides, the energy ministry said.
The two sides discussed plans to explore oil and gas along the island's northwestern sea board.
"Iranian delegates agreed to get Iranian companies involved in the process once the bidding round is announced and to provide technical assistance for exploration and exploitation of oil and gas," an energy ministry official said.
The Sri Lankan parliament in June approved laws allowing private sector investments in oil and gas exploration and sharing of profits with foreign and local companies.
The new laws allow private sector participation in exploration as well as exploiting possible petroleum resources found in the island or within its waters.
In the early 1970s, Sri Lanka drilled seven wells in the north-western Mannar region, but found no oil and the country continues to import all its petroleum needs.
However, neighbouring India was already producing three million barrels from wells in the Cauvery Basin, the area between the shores of Sri Lanka's northwest and India's southern tip, according to officials here.
The laws approved in June set the stage for a committee that will issue licences to prospective investors for exploration and recovery of oil and gas.
In the past, the private sector was not allowed to get into oil exploration which remained the sole responsibility of the state.