Sri Lanka’s Ceylon Petroleum Corporation (Ceypetco) is seeking a rare cargo of ultra-low sulphur diesel as it introduces environmentally cleaner fuel at its retail stations, industry sources said.

Though volumes are still small, it could provide a new market for cleaner diesel which is produced by most refineries in Asia but only used in a handful of countries in the region, traders said.

The state-owned company is also separately negotiating to secure a term supply for diesel with 10 parts per million (ppm) sulphur, a source close to the company said.

The company usually imports diesel with 500ppm sulphur and 2,500ppm sulphur through monthly tenders and term contracts.

“Ceypetco is replacing some of the 500 ppm sulphur diesel with 10 ppm sulphur diesel at its retail stations,” the source said.

This is to power some of the newer cars which require environmentally cleaner fuel, traders familiar with the Sri Lankan fuel market said.

“They are starting to buy the 10ppm (sulphur diesel) for transportation in the big cities for some of the newer cars,” one of the traders said.

In the latest tender, Ceypetco is seeking a combination cargo of 60,000 barrels of 10 ppm sulphur diesel, 150,000 barrels of 500 ppm sulphur diesel and 100,000 barrels of 92-octane gasoline for delivery into Colombo over Oct. 12 to 13. The tender closes on Aug. 20. This will be the third 10 ppm sulphur diesel cargo that Ceypetco will import in October, the first source said.

The other two cargoes, also to be delivered in October, will likely be from trader Swiss Singapore and originate from Reliance Industries in India, the source added, Reuters reports.