Trincomalee oil tank farm

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Last Updated05/01/2022

Sri Lanka’s Energy Minister Udaya Gammanpila announced that the Indian Oil Subsidiary Lanka IOC would be given 49% stake in the joint development of the Trincomalee Oil Tank farm
Its Ceylon Petroleum Corporation will keep 51% stake

It was built by the British during World War II as a refuelling station
It is located in ‘China Bay’ in close proximity to the internationally coveted deep water natural harbour of Trincomalee.
This joint development proposal was conceived in the 1987 India-Lanka Agreement 35 years ago.
It consists of 99 storage tanks, each with a capacity of 12,000 kiloliters, divided into a lower tank farm and an upper tank farm.
In 2003, Indian Oil Corporation established Lanka IOC, a subsidiary of Sri Lanka, to operate on this oil farm.
Lanka IOC currently operates 15 tanks.

It was signed on 29th July 1987 in Colombo
It is also known as the Rajiv-Jayewardene Accord, after its architects-Prime Minister Rajiv Gandhi and President J.R. Jayewardene.
It was signed as an effort to bring the Sri Lankan civil war to an end.
This accord saw the induction of the Indian Peace Keeping Force (IPKF) in Sri Lanka.
It was part of the annexure to this Accord that the tank farm would be developed jointly.

The agreement remained dormant for nearly 15 years at first prevented by the civil war.
In 2002, a Norway-brokered ceasefire halted the war.
India which was initially reluctant about investing too much in Trinco, began pushing for the project only after China swung Hambantota in 2010
In March 2015, during Prime Minister Narendra Modi’s visit to Sri Lanka, the two sides agreed to set up a petroleum hub in Trincomalee, for which a “joint task force” would draw up plans.
India and Sri Lanka signed an MoU for several projects in 2017 including an agreement on the refurbishment of the Trinco tank farm.

Strategic location in the Indian Ocean: The facility is inland from China Bay which can be used by China against India
Easy access: It is the closest port to Chennai and from 2010 to 2011, authorities proposed refurbishing the tank terminal as an extension of the Indian oil depot on the east coast of India, or expanding it as a refuelling system for small vessels.
Balancing China: It is an important counterweight to southern Hambantota Harbour which is primarily supported by China.