The Ceylon Petroleum Common Workers Union has stopped releasing gasoline from 12 storage facilities, causing long lines at gas stations across Sri Lanka. The industrial action came in response to government plans to lease 14 of 99 oil storage tanks to Indian state oil companies.
The secretary of the trade union told AP that the oil workers are planning to take further steps and completely stop working at Sri Lanka’s state refinery, if the government does not put a stop to the plans. According to the workers, this plan will compromise Sri Lanka’s sovereignty and will only be of benefit to the Indian side.
Some of the tanks were already leased to a local division of Indian Oil Corporation back in 2002, as they were sitting unused at the port of Trincomalee. Now, Colombo plans to lease 14 and strike a joint venture with India for the utilization of the rest of the tanks.
A spokesman for the Ministry of Petroleum Resources Development told media that no agreement with the Indian side has been finalized and that the minister will meet with the workers’ union today to discuss their demands.
With its growing demand for crude oil and fuels, India is in urgent need for more oil storage capacity. Earlier this year, New Delhi signed an agreement with the UAE to fill an underground storage facility in Mangalore to store 6 million barrels of crude oil. The agreement is part of efforts to build emergency storage capacity totaling 36.87 million barrels in underground facilities. The amount is equal to the country’s ten-day consumption based on 2016 demand figures.
Now, India is building two more strategic storage facilities to add to the existing three in a bid to insure itself against future shortages. The Sri Lanka agreement is most likely part of these insurance efforts.
By Irina Slav for Oilprice.com
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Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.