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Petroleo Brasileiro (Petrobras) S.A. is reported to be examining the possibility of entering the Sri Lankan petroleum market, according to Sri Lankan newspaper The Daily Mirror.

The Brazilian energy firm's interest in the Sri Lankan market follows the award of a recent fuel oil supply contract to Petrobras Singapore Private Ltd. Ceylon Petroleum Corporation (Ceypetco) chose Petrobras amongst a number of other bidders including Shell, BB Energy, Kuo Oil, Vitol and Trafigura, who also put in offers for the tender.

The three month contract to supply Ceypetco with fuel oil is reported to be worth in the order of US$70 million.

Petrobras is now said to be considering the idea of developing its involvement in the Sri Lankan market. Rizly Illyas, Managing Director of the company’s local agent Tradis Holdings told the Daily Financial Times that if the company was able to blend sweet crude oil in Sri Lanka, it could enter the petrolem sector there. This could then open the way for the Brazilian firm to supply a range of petroleum products in the country, including marine fuels.

Iranian light crude oil is currently the main product being used for blending in Sri Lanka.

According to local sources, Petrobras will be sending a team of experts to carry out an evalutaion with respect to the possibility of conducting oil exploration in Sri Lanka. Technicians and specialists are expected to arrive in Colombo within the next two weeks.

Earlier this year, market sources reported that Ceypetco had interests of its own to enter the marine fuels market. In March, Bunker Index reported that a tank farm was being converted in Sri Lanka as part of an overall project that will link all the main petroleum facilities with each other and with the port of Colombo.

The tank farm, located in Muthurajawela, is jointly owned by Ceylon Petroleum Corporation (Ceypetco) and Indian Oil Corporation through Ceylon Petroleum Storage Terminals Ltd. (CPSTL).

The conversion project is said to form part of Ceypetco's strategy to enter the bunker market in the near future together with a private joint venture partner who would supply Ceypetco with bunker barges to carry out deliveries in the open sea.