The UAE, India, and Sri Lanka signed an agreement to develop an energy hub in Sri Lanka’s strategic port city of Trincomalee during Indian Prime Minister Narendra Modi’s visit to Colombo, Reuters reports. India’s External Affairs Ministry also shared the news in a social media post. The agreement marks the first major trilateral energy partnership in the region.

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The details: The energy hub will be located in Trincomalee, a port city on Sri Lanka’s east coast. Plans include a multi-product pipeline and potential use of WWII-era oil storage tanks managed by Indian Oil Corp. It has not been revealed whether production will be exported or earmarked for domestic use.

What’s next? The UAE’s role in financing and feasibility studies will be determined through talks between businesses from the three nations. India’s Foreign Secretary Vikram Misri said the Emirates were “a strategic partner for India in the energy space,” making it an ideal partner on the project.

In context: The agreement intensifies the regional competition between China and India for influence in Sri Lanka, which saw India hand Sri Lanka USD 4 bn in financial aid following its 2022 crisis, and Beijing’s state-owned energy company Sinopec agree to build a USD 3.2 bn oil refinery in Hambantota, a port city in southern Sri Lanka.

ICYMI- The UAE signed an investment agreement with Sri Lanka last month to strengthen economic ties between the two countries, while recent Emirati-India cooperation includes logistics giant DP World launching a new rail service between depots and ports in India.

OTHER ENERGY NEWS-

Gulf energy giants to extend their Kenyan supply contract: State-owned Adnoc, Emirates National Petroleum, and Saudi Aramco will continue to supply gas, diesel, kerosene, and jet fuel to Kenya under a six-month credit plan, Kenya’s Energy and Petroleum Regulatory Authority director general Daniel Kipto told Bloomberg. Kenya renewed its 24-month contract to uptake fuel from the three firms — with the two-year extension set to take effect by the end of 2025. The new arrangement replaces the previous open-tendering system, which required nearly USD 500 mn to be paid monthly, five days after delivery.

That’s not all: A renegotiation of margin reductions has also helped slash freight and premium costs by 11% to USD 78 per metric ton for diesel, 7% to USD 84 for gasoline, and 13% to USD 97 for jet fuel. Kenya re-exports part of its oil import shipments to Burundi, the Democratic Republic of Congo, and South Sudan, Kipto added, noting that plans are in the works to add Rwanda to this list.

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