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CPC incorporates company for LIOC Trinco venture 

31 Dec 2021

  • CPC-LIOC oil tanks development agreement soon
  • Press conference scheduled for today
  BY Shenal Fernando  Trinco Petroleum Terminals Ltd., the newly formed subsidiary of Ceylon Petroleum Corporation (CPC), for the development and management of the Trincomalee oil tank farm in China Bay, has been incorporated, The Morning Business learns.  Speaking to us yesterday (30), Minister of Energy Udaya Gammanpila stated that the incorporation of Trinco Petroleum Terminals Ltd. has been completed and that the new subsidiary will be responsible for the development and management of the Trinco oil tank farm.  He further stated: “The agreement between CPC and Lanka IOC (LIOC) for the joint development of the Trinco oil tank farm will be inked soon and that even under the agreement, the CPC will retain majority control over Trinco Petroleum Terminals Ltd. as its subsidiary company.”  CPC Chairman Sumith Wijesinghe also confirmed the incorporation of Trinco Petroleum Terminals Ltd. and stated that a press conference will be held today (31) with the participation of the Minister of Energy to disclose to the public the exact details of the venture. Explaining further, he stated that the Trinco oil farm will not be utilised to supply fuel to the local market and instead will be utilised as a terminal for the storage and export of fuel to capitalise on arbitrage. He further stated that a feasibility study is currently being conducted to identify the potential commercial opportunities available for the oil tank farm. Responding to our query on whether CPC and LIOC will look to involve other parties in the venture, he stated: “Discussions have been conducted regarding the involvement of the other parties. However, as of yet, we have not reached a conclusive decision in relation to it. As of now, the only confirmed parties in relation to the venture are CPC and LIOC.”  Negotiations between CPC and LIOC over the joint development of the Trinco oil tank farm have dragged on for around 16 months. However, the negotiation process appeared to have been rejuvenated following the recent visit to India by Minister of Finance Basil Rajapaksa from 1 to 2 December, where discussions were carried out regarding an energy security package which included a line of credit to cover the importation of fuel from India, and an early modernisation of the Trinco oil tank farm. With the incorporation of Trinco Petroleum Terminals Ltd. it appears that negotiations have reached the final stages and Minister Gammanpila has repeatedly claimed to several media institutions that an agreement will be inked within one month. Sources within CPC have disclosed to The Morning Business on condition of confidentiality that it is possible that an agreement will be reached before that.  The Trinco oil tank farm is located on 850 acres of land and originally contained 101 tanks, each with the capacity to hold 12,100 metric tonnes (MT) of oil.  Out of the original 101 tanks, two were destroyed by a kamikaze attack during the Japanese air raid on Trincomalee on 9 April 1942 and when a Royal Ceylon Air Force plane crashed in the early 1960s.  Of the 99 oil tanks remaining in existence, 14 are already being utilised by the LIOC. The remaining 85 tanks are reported to be in a state of disrepair and this purported agreement between CPC and LIOC will be for the renovation and development of these 85 oil tanks.


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