India signs development pact with Sri Lanka to develop Trincomalee as regional petroleum hub

India will help Sri Lanka develop its Trincomalee town as a regional petroleum hub, following a joint development pact between India’s state-owned oil and gas company Indian Oil Corp. and Sri Lanka’s Ceylon Petroleum Corp.

The agreement, as well as a task force to implement it, were announced after a meeting between India’s Prime Minister Narendra Modi and Sri Lankan President Maithripala Sirisena in Colombo last week.

Modi was the first Indian prime minister to visit Sri Lanka in nearly three decades. He is looking to reassert India’s influence over its neighbor Sri Lanka, after its drift towards China.

“Today, Lanka IOC and Ceylon Petroleum Corporation have agreed to jointly develop the Upper Tank Farm of the China Bay Installation in Trincomalee on mutually agreed terms,” Modi said.

Lanka IOC, IndianOil’s subsidiary in Sri Lanka, is the only private oil company that operates retail stations in the island-nation. Lanka IOC operates about 150 outlets. Its major facilities include an oil terminal at Trincomalee, Sri Lanka’s largest petroleum storage facility, and an 18,000-tonne-per-annum lubricant blending plant and state-of-the-art fuels and lubricants testing laboratory in Trincomalee.

Modi said that the ocean economy held “enormous promise” for both countries. “Our decision to set up a Joint Task Force on Ocean Economy is a significant step, especially because of our proximity,” he said.

“Our trade has seen impressive growth over the past decade… The agreement today on cooperation between our customs authorities is a step in that direction. It will simplify trade and reduce non-tariff barriers on both sides,” he said.