by Our Correspondent in New Delhi
India is reportedly considering a landmark 99-year lease of Sri Lanka’s Trincomalee Oil Farm, potentially giving Indian firms near-total operational control of the historic facility. The proposal follows discussions between Indian Prime Minister Narendra Modi and Sri Lankan President Anura Kumara Dissanayake, during which Modi urged Colombo to expedite agreements previously signed with India and the United Arab Emirates to develop the strategic Eastern port’s oil infrastructure.
Sources indicate that the UAE has already signaled support for India’s plan. The trilateral arrangement reflects deepening ties between India and the UAE, strengthened further by newly enacted defense agreements concluded during Modi’s recent Gulf visit, just a few weeks before the outbreak of conflict involving Iran.
At least three sources familiar with the ongoing discussions, speaking on condition of anonymity, suggest that India’s top oil importer, Mukesh Ambani-led Reliance Industries, has expressed keen interest in the Trincomalee project. Under the proposed deal, India would operate 99 tanks under a 99-year lease, with Ceylon Petroleum Corporation (CPC) acting as a regulatory partner with minimal trading authority to represent the Sri Lankan state.
Trincomalee already hosts Trinco Petroleum Terminal (Pvt) Ltd, a joint venture between CPC and Lanka IOC (LIOC). The company’s primary objective is to refurbish and upgrade 61 steel storage tanks at the Upper Tank Farm, China Bay Installation, creating a modern petroleum storage terminal. Once completed, the facility will provide storage and blending services for international oil majors and suppliers, enabling global petroleum trade through the terminal. The lower tank farm remains operational under CPC and LIOC, with some tanks leased for minor uses, while older infrastructure from the 1930s is being upgraded at a projected cost of USD 500 million.
Strategically, the Trincomalee project aims to connect the oil storage terminal with India’s Visakh Refinery in Andhra Pradesh, one of two refineries operated by HPCL. Commissioned in 1957 and acquired by the Indian government in 1976, Visakh Refinery has serves as a key node for India’s crude oil supply chain.
If finalized, the 99-year lease would grant India long-term operational access to a critical fuel storage hub in the Indian Ocean region, while CPC maintains a regulatory oversight role. According to a source in New Delhi, “By leveraging the existing Trinco Petroleum Terminal infrastructure, the initiative would allow India to secure strategic petroleum reserves and facilitate international oil trade through Sri Lanka, strengthening regional energy ties.”
