Sri Lanka may extend its contract with Indian Oil Corporation for import of diesel and jet fuel during February-April.
"IOC's term contract for sale of 30,000 tonnes of diesel and 10,000 tonnes of jet fuel (aviation turbine fuel) a month expired on December 31. Sri Lanka did not buy any fuel from IOC in January but it is likely to extend the contract by three months," senior company sources said on the sidelines of an oil and gas conference in New Delhi.
India's largest refinery, IOC, had last year signed a one-year contract to export 30,000 tonnes of diesel and 10,000 tonnes of jet fuel a month during October 2002 to September 30, 2003. While there were no exports in October, the contract was extended by two months till December 31.
Sources said the previous term contract was to supply diesel with 1.0 per cent sulphur content, but Sri Lanka now wanted to renew the contract only if the fuel's sulphur content was 0.25 per cent.
IOC has been exporting diesel with 0.5 per cent sulphur content to Sri Lanka and will export the fuel with the new specification in February-April.
"A fresh contract for diesel and jet fuel, with new specification, is likely to be inked this week. Currently, IOC is negotiating the price with Sri Lankan national oil company Ceylon Petroleum Corporation," they said.
After the three-month extension, IOC will pitch for its extension till the year end, after which Colombo is not likely to import fuel as a third retail player will be in place by then.
Sources said after Sri Lanka selects a third retail player for selling fuel, Colombo will not be required to import fuel on its own.
While CPC had enough refining capacity to fuel its petrol stations, IOC sources transport fuel from its refineries in India and the third player, who will own one-third of country's retail network, will do so for its own requirement.
IOC's term contract of 40,000 tonnes a month is besides the fuel it exports for its 115 petrol stations. It proposes to take the number of petrol stations to 250 by year end.
State-refiners Hindustan Petroleum Corporation Ltd and Bharat Petroleum Corporation Ltd and private sector Reliance Industries Ltd are in the race for the third retail player in Sri Lanka.
IOC had last year acquired 100 petrol stations from CPC for $75 million and will add another 150 franchise outlets this year.
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