By: Staff Writer
June 02, Colombo (LNW): Sri Lanka is in talks with the United Arab Emirates (UAE) to establish a long-term credit line to directly import crude oil and refined petroleum, as the island nation grapples with ongoing fuel needs and foreign exchange constraints.
The move could mark a significant shift in Sri Lanka’s energy procurement strategy, potentially easing pressure on its forex reserves and enhancing regional energy cooperation.
A high-level meeting was held at the Presidential Secretariat in Colombo between representatives from the Abu Dhabi National Oil Company (ADNOC) and a Sri Lankan delegation. Leading the discussions were Power Minister Kumara Jayakody and Deputy Economic Development Minister Dr. Anil Jayantha Fernando.
The talks focused on securing petroleum supplies, exploring investment opportunities in Sri Lanka’s energy sector, and laying the groundwork for joint ventures.
Key figures at the meeting included UAE Ambassador to Sri Lanka Khaled Nasser Al Ameri and ADNOC Senior Vice President for Crude and Condensate, Abdulla Al Qubaisi.
Talks revolved around the formation of a long-term oil supply agreement on concessionary terms, improving Sri Lanka’s refining capacity, and strengthening its position in the regional petroleum market. Energy Ministry officials confirmed preliminary discussions on the oil credit line were underway.
The two sides also agreed to sign a Memorandum of Understanding (MoU) aimed at enhancing bilateral cooperation in the energy sector.
The initiative follows recent discussions between UAE’s Ambassador Sheikh Ahmed Ali Hamad Al Mualla and Sri Lanka’s Energy Minister Udaya Gammanpila, who highlighted the urgency of securing affordable oil due to a dollar shortage.
Trincomalee, a key port city on Sri Lanka’s east coast, is also set to become a focal point in a trilateral energy partnership involving India, Sri Lanka, and the UAE. Under a framework agreement signed by the three nations,
Trincomalee could be transformed into a major energy hub. The plans reportedly include infrastructure projects such as a potential pipeline between India and Sri Lanka and the development of a new oil refinery.
However, exact details of UAE’s role in the Trincomalee initiative remain unclear. Indian Foreign Secretary Vikram Misri confirmed that refurbishing the World War II-era Trincomalee Oil Tank Farm – partially owned by Indian Oil Corp – could be part of the project. While the broader plan awaits further business-to-business discussions, it underscores India’s increasing engagement in Sri Lanka’s energy sector.
Meanwhile, China’s presence in Sri Lanka’s energy landscape remains a point of tension. A proposed $3.7 billion oil refinery in Hambantota by China’s Sinopec has raised strategic concerns in New Delhi, particularly given the port’s proximity to India. If completed, this would be Sinopec’s first fully controlled overseas refinery.
For the UAE, closer collaboration with India in South Asia serves its broader strategic interests, especially amid growing regional competition with Saudi Arabia. The trilateral framework with Sri Lanka and India could bolster Abu Dhabi’s influence and complement India’s already significant footprint in Sri Lanka’s energy sector.
