Crude oil price plunges down, but Sri Lanka fails to optimise gains from it ?

Under utilized Oil Tank Farm at Trincomalee!

Brent crude is sourced from North Sea has plunged down and the cost today of a barrel contracted for delivery in June is down 22% at $19.71, the lowest since 2002.

Earlier, though Sri Lanka’s state-run Ceylon Petroleum Corporation (CPC) was running losses, when the Brent crude was down to $33.73 per barrel from $56 a week earlier, Sri Lanka was looking for ways to buy extra oil at low prices using derivatives or government-to-government deals. Then President instructed officials to look at using government to government agreements.

Now with Global oil prices plunging again after the Coronavirus epidemic cut transport around the world. Following it Saudi Arabia cut oil prices and its from whom Sri Lanka imports refined petrol, diesel and kerosene, while some Oman crude is imported for refining.

Bitter truth is there is a thought in the mind of ordinary people to expect the government to purchase oil to build up a buffer stock. Unfortunately, with the COVID-19 pandemic came the shutdown still in force, has considerably reduced the oil consumption in the country.

In this scenario, even if government manage to arrange government to government deals, problem is the availability of storage capacity. For there is no space left to store a buffer stock.

Regrettably, since independence in 1948, successive governments have failed to generate a National Development Plan. If such plan was in place, ample storage capacity available for Bulk Storageof Fuels in the Tank Farm in Trincomalee left behind by the British would have been put to optimum use. With at present only part of the 85 Oil storage tanks in Trincomalee developed by a joint venture between the Ceylon Petroleum Corporation and Lanka IOC Plc (LIOC).

Perhaps the new President will instruct his authorities to correct this situation to utilise these storage facilities that is a valuable asset of the state in the East into a holistic National Development Plan.

After the General Election the government could perhaps come up with a holistic National Plan that puts available resources to optimum use, including the presently partially utilised Bulk Fuel Storage Facilities in Trincomalee. This would enable the country to maintain a buffer stock, purchased with price advantage.