Sri Lanka's central bank said the deals were 'tainted' and advised banks not to proceed with the deals.
State-run People's Bank has also halted payments to its counterparties on two deals, a foreign and local bank, which market participants say has hurt inter-bank transaction integrity.
Sri Lanka is also in the throes of a balance of payments crisis, with depleting reserves. The first round of negotiations would start Wednesday afternoon.
"We are talking to the banks today," deputy finance minister Sarath Amunugama said.
"That is all that can be said at the moment."
Amunugama is part of a government committee that has been charged with re-negotiating the deals, which were sold to Ceylon Petroleum Corporation by Citibank, Standard Chartered, Deutsche Bank and two Sri Lanka banks; state-run People's Bank and public listed Commercial Bank of Ceylon.
Media reports said at least one foreign bank had gone into arbitration after CPC stopped making pa