- 2 more being repaired; pipelines need fixing
- Pipeline tender expected next month
- Full project targeted for completion within 18 months
While the refurbishment of two oil tanks at the Trincomalee Oil Tank Farm has concluded, they cannot be utilised yet due to unfinished pipeline connections and supporting infrastructure, according to Deputy Minister of Energy Arkam Ilyas.
“At the Trincomalee oil tank complex, work began on four tanks, and two have been completed. We still cannot fill them with oil because the relevant pipeline system is not finished,” Ilyas said, during the Annual General Meeting of the Ceylon Petroleum Common Service Union (CPCSU).
Ilyas further noted that concurrent plans were underway to double the capacity of the Sapugaskanda Oil Refinery to 100,000 barrels a day.
Ceylon Petroleum Corporation (CPC) Managing Director Dr. Mayura Neththikumarage confirmed to The Sunday Morning that the tank renovation projects were funded and that they were now moving towards the procurement phase.
“The tender is yet to be published, but everything is ready. It is expected to be finished within 18 months. There are no issues, as the funding is secured. The documents are ready, and it will likely be published by the middle of next month. The entire pipeline and new jetty currently under construction will be connected to all 85 tanks. This includes 61 tanks for Trinco Petroleum Terminal Ltd. and 24 for the CPC. The entire complex will be developed,” Dr. Neththikumarage explained.
Beyond storage, the Government is looking to expand local refining capabilities to reduce import dependency, particularly for higher-grade fuels.
“The Sapugaskanda Oil Refinery can currently process 50,000 barrels a day. We have started an expansion project to increase that capacity to 100,000 barrels. We called for proposals, and a large number of investors have stepped forward and are ready. Even today, we cannot refine octane 95; we can only refine octane 92. Therefore, we have initiated a programme to increase our refining efficiency and capacity,” Ilyas explained.
Dr. Neththikumarage noted that the refinery expansion project operated on a Build, Operate, and Transfer (BOT) model and would take several years to physically construct.
“The Expression of Interest (EOI) stage is finished, and a couple of parties have been selected. We are currently finalising the Request for Proposal (RFP), which is almost complete. Next week, there will be meetings to finalise the documents. Once done, it is simply a matter of approval and publication. The investors will build and run the refinery, but the CPC will own it. The refinery construction will take around four years, and until then, the current refinery will remain operational, producing octane 92 and normal auto diesel. After four years, its capacity will be doubled,” Dr. Neththikumarage stated.
In conjunction with refining capabilities, the State is also attempting to mitigate sudden supply shocks by establishing a permanent buffer stock, a protective measure that Ilyas admitted the country previously lacked.
“We are able to store fuel for a maximum period of only one to one-and-a-half months. These are not tanks kept in reserve; they are in active use. This means we have to bring in the next ship and fill them as the current stock depletes. Therefore, we previously had absolutely no buffer stock. We have now started a project to build one and we believe that once it is completed, we will achieve better stability,” Ilyas observed.
According to Dr. Neththikumarage, the State has allocated Rs. 32 billion for this capacity development, utilising empty tanks in Muthurajawela and Kolonnawa. While the buffer stock will not shield the country from global oil price fluctuations, it will lower logistical expenses.
“Once we have bigger stocks, we can order larger volumes at a time. When we place larger orders, the premiums, shipping charges, and related costs will normally be reduced. That reduction will apply across the board,” Dr. Neththikumarage explained.