Petroleum giant Sinopec signed an agreement with Sri Lanka on Monday to enter the South Asian island country's retail fuel market as it struggles to resolve a worsening energy crisis amid an unprecedented economic upheaval.

The contract agreement would enable Sinopec to import, store, distribute and sell petroleum products in Sri Lanka, which has had a fuel shortage for more than a year.

Sri Lanka, which is facing a foreign exchange crisis, hopes the deal will help to resolve its energy crisis.

The agreement signed on Monday in the Sri Lankan capital, Colombo, was made to “ensure uninterrupted fuel suppliers to consumers,” the president's office said in a news release.

Under the pact, Sinopec will be granted a 20-year licence to operate 150 fuel stations currently operated by Sri Lanka’s state-run Ceylon Petroleum Corporation, and to invest in 50 new fuel stations and in the country's energy sector, the nation's Power and Energy Ministry said in a statement.

Sinopec can start operations within 45 days of licence issuance and "this development brings hope for a more stable and reliable fuel supply, boosting the country’s energy sector and providing assurance to consumers,” the president's office said.

When the economic crisis hit Sri Lanka last year, the government couldn't find foreign currency to import fuel, triggering a severe shortage that lasted for more than two months and forcing people to endure long lines at fuel stations. Sri Lankans are still allotted limited amounts of fuel that is distributed according to a QR code system.

In an effort to resolve the crisis, Sri Lanka opened its retail fuel market to foreign petroleum companies, asking them to use their own funds to purchase fuel, without depending on Sri Lankan banks for foreign exchange. The government has given approval to two other foreign companies – Australia’s United Petroleum and US company RM Parks in collaboration with Shell – to enter its fuel market. (Reuters)