BY Shenal Fernando
Trinco Petroleum Terminals Ltd., the newly formed subsidiary of Ceylon Petroleum Corporation (CPC), for the development and management of the Trincomalee petroleum tank farm in China Bay, was incorporated, Morning business learn.
Addressing us yesterday (30), Energy Minister Udaya Gammanpila said that the incorporation of Trinco Petroleum Terminals Ltd. was completed and that the new subsidiary would be responsible for the development and management of the Trinco oil tank farm.
He added: “The agreement between CPC and Lanka IOC (LIOC) for the joint development of the Trinco oil tank farm will be signed soon and that even under the agreement, the CPC will retain majority control of Trinco. Petroleum Terminals Ltd. subsidiary company.”
CPC Chairman Sumith Wijesinghe also confirmed the incorporation of Trinco Petroleum Terminals Ltd. and said that a press conference will be held today (31) with the participation of the Minister of Energy to disclose the exact details of the company to the public.
Explaining further, he said the Trinco oil farm will not be used to supply fuel to the local market and will instead be used as a terminal for the storage and export of fuel to capitalize on arbitrage. He added that a feasibility study is currently underway to identify potential business opportunities available for the oil tank farm.
Responding to our question as to whether CPC and LIOC will seek to involve other parties in the business, he said: “Discussions have been held regarding the involvement of other parties. However, as of yet, we have not yet made a final decision on this matter. At present, the only confirmed parties in relation to the company are CPC and LIOC. ”
Negotiations between CPC and LIOC on the joint development of the Trinco oil tank farm have been dragging on for about 16 months. However, the negotiation process appears to have been rejuvenated following the recent visit to India by Finance Minister Basil Rajapaksa from December 1 to 2, where discussions were held on an energy security package that included a line of credit to cover l importation of fuel from India, and early modernization of the Trinco oil park.
With the incorporation of Trinco Petroleum Terminals Ltd., it appears that negotiations have reached final stages and Minister Gammanpila has repeatedly told several media institutions that an agreement will be signed within a month. Sources within the CPC revealed to Morning business subject to confidentiality that it is possible that an agreement will be reached before this.
The Trinco Oil Tank Farm is located on 850 acres of land and originally contained 101 tanks, each capable of holding 12,100 metric tonnes (MT) of oil.
Of the original 101 tanks, two were destroyed by a kamikaze attack during the Japanese air raid on Trincomalee on April 9, 1942 and when a Royal Ceylon Air Force plane crashed in the early 1960s.
Of the remaining 99 oil tanks, 14 are already in use by the LIOC. The remaining 85 reservoirs are said to be in an advanced state of disrepair and this alleged agreement between CPC and LIOC will relate to the renovation and development of these 85 oil reservoirs.