• Bidding for another refinery expansion selling 40% of output locally 
• GoSL plans to invest $ 3 b for CPC Col. refinery next year

Sri Lanka expects Chinese State energy giant Sinopec to start work on a $ 3.7 billion refinery this year and is considering the company’s long-standing demand to sell more fuel locally, the Energy Minister, Engineer Kumara Jayakody said on Tuesday (16).

The Sinopec refinery, approved in 2023, will have the capacity to process 200,000 barrels of crude oil per day and will be located near the Chinese-built and operated Hambantota Port, Jayakody said in an interview at his office. “The land we already have allocated for them, and they have done the other facilities too,” he said. “The Government, we all have the same idea and the same expectation on this project (that it will start this year).”

Deputy Economic Development Minister, Anil Jayantha Fernando, separately told Reuters that Sinopec could take about three years to complete the project.

A Chinese industry executive with direct knowledge of the project said that Sinopec has been waiting for months for the latest proposal from the Sri Lankan Government on access to the local fuel market.

Previously, Sri Lanka had wanted Sinopec to sell only 20% of the refinery’s output locally and export the rest, but it is now considering a proposal allowing the company to sell up to 40% domestically, Jayakody and another official said.

“From what they tell us, if they don’t have greater market access, feasibility and viability in the current context (could be challenging),” said the Chair of the Board of Investment, Arjuna Herath. “That’s the point that’s being negotiated as to what it should be – whether it should be 30, 40 (%) or other points. So, there is a lot of commitment to see whether we can work this out.”

For energy security, Sri Lanka also plans to invest about $ 3 billion to expand its State-run 38,000 barrels per day (bpd) refinery near Colombo to up to 150,000 bpd, Jayakody said. Sinopec is among the companies from countries including China, India and Qatar that have shown interest in the project, he said. Expansion work at the refinery, run by Ceylon Petroleum, will start next year and finish in two to three years, he added.

Sinopec participated in Sri Lanka’s tender briefing early this month on the refinery expansion and has until 26 September to submit a letter of interest, said the Chinese executive.

India said earlier this year that it was working on establishing an energy hub on Sri Lanka’s Eastern coast.

(Reuters)