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India will continue to help Sri Lanka despite giving license to foreign oil companies

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Sri Lanka has allowed China’s Sinopec and two other foreign companies to operate in the retail fuel market, while the state-run Indian company has a dominant market share.

Officials said in New Delhi that the two countries have common interests. So India will continue to help Sri Lanka with fuel infrastructure. Lanka IOC and a subsidiary of Indian Oil Corporation account for a third of the island’s fuel retail market. The rest of the market is held by the state-run Ceylon Petroleum Corporation (CIPETCO).

India’s Petroleum and Natural Gas Secretary Pankaj Jain visited Sri Lanka earlier this week with a delegation. According to reports published in the local media, Jain insisted on increasing the participation of both the countries in the potential projects in the energy sector.

He said that countries must explore the possibilities of renewable energy sources such as green hydrogen, ammonia and compressed biogas.

India is not ready to back down

Sri Lanka’s parliament on Tuesday allowed Chinese state-owned Sinopec, United Petroleum Australia and US-based RM Parkes to operate in the country. America’s RM Park has a tie-up with Britain’s oil giant Shell.

Sri Lanka’s Minister of Power and Energy Kanchana Wijesekara tweeted, “These three companies will each be allocated 150 dealer operated fuel stations.” In recent times these stations are operated by CPETCO. These three companies have been given licenses to import, store, distribute and sell oil products in Sri Lanka for 20 years. These selected companies will also set up 50 fuel stations at new locations.

At present, Lanka IOC operates 211 such outlets. The Indian official said, “The Sri Lankan government has recently given permission to open 50 more outlets and work is going on in this direction.”

Sinopec is increasing its hold on the Sri Lankan market. Sinopec is a unit of China Petrochemicals Corporation. China Petrochemicals Corporation is the world’s largest oil refining, gas and petrochemicals conglomerate. Sri Lanka offered Sinopec in March to finance and build a proposed refinery near the disputed Hambantota international port.

China is building the Hambanton port with its own financial resources. Sri Lanka has agreed to jointly develop the Trikomali oil field with India at a cost of $550 million after five years of negotiations. CPETCO will hold 51 per cent stake in Trinco Petroleum Terminal Limited and the rest will be held by Lanka IOC.

neighbors and partners

India seeks Sri Lanka’s partnership in petroleum exploration. Sri Lanka is in the process of issuing two-year licenses for oil and exploration in 900 offshore blocks to foreign companies. ONGC Videsh Limited (OVL) is interested in the North West region of Sri Lanka.

According to Indian officials, Sri Lanka is seeking a new temporary credit facility of $1 billion from India. Colombo held talks last week to increase last year’s $1 billion payment limit. According to the International Energy Agency, Sri Lanka’s 22 million people used 123,000 barrels of oil daily in 2019 before the pandemic and economic crisis.


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