Deputy Minister of Energy,  Arkam Ilyas, said yesterday (4) Sri Lanka is currently engaged in negotiations with the Chinese side and remains hopeful of a positive outcome on the US$ 3.7 billion Hambantota oil refinery project.

“The discussions are ongoing to arrive at a workable arrangement by addressing the concerns of all the parties involved. We are engaging in negotiations with them. We need to make it workable by addressing the concerns of all the parties, and we are hopeful of a positive outcome at the end of the negotiations,” the Minister said.

It was reported earlier that China had informed the Government the project would not be viable under the original terms, which required 80 per cent of the refinery’s output to be exported and only 20 per cent  to be sold in the domestic market. The Chinese side is now seeking a higher share for local sales, with indications that around 30 per cent of the output would need to be allocated to the Sri Lankan market for the project to be sustainable. 

Once operational, the proposed refinery in Hambantota is expected to process 200,000 barrels of crude oil per day. The project, announced in January of 2025 during President Dissanayake’s State visit to Beijing, China, has been described as the largest single Chinese direct investment in Sri Lanka.