• Investors from China, India, UAE, Saudi Arabia in the pipeline

Sri Lanka is preparing to call for Expressions of Interest (EOIs) from international investors to upgrade its sole oil refinery in Sapugaskanda, according to the State-run Ceylon Petroleum Corporation (CPC).

The project aims to triple the refinery’s current capacity from 50,000 barrels per day to 150,000 barrels per day, positioning it to fully meet the country’s refined petroleum demand.

CPC Managing Director Dr. Mayura Neththikumarage confirmed that all necessary Cabinet approvals had been secured and the call for EOIs would be made within the next two months. 

Preliminary feasibility studies, originally conducted in 2022, are being utilised for project planning, alongside a series of technical discussions with stakeholders.

“We are now ready to invite EOIs for the Sapugaskanda Oil Refinery. Our aim is to expand its capacity to 150,000 barrels per day, which will be sufficient to meet the full requirement of the CPC,” Dr. Neththikumarage told The Sunday Morning. 

“Currently, we meet only part of our demand through refining and we import the rest as finished products. After this expansion, we intend to fulfil the entire requirement domestically,” he added.

The estimated investment for the project is around $ 3 billion, slightly lower than the $ 3.7 billion refinery project in Hambantota, which targets a capacity of 200,000 barrels per day.

Dr. Neththikumarage expressed strong confidence in attracting global investors, citing existing interest from China, India, the United Arab Emirates, and Saudi Arabia.

“The refinery business is extremely lucrative. As long as there is investment security, we are confident of attracting investors. Energy is a sustainable and profitable sector, and many investors are already in the pipeline,” he added.

To ensure transparency and accountability, a multi-disciplinary committee has been appointed to evaluate the EOIs. The committee will include experts from financial, legal, and technical sectors, although the official names are yet to be published, pending approval from the Ministry of Finance.

Responding to questions about legal frameworks, Dr. Neththikumarage clarified that no amendments to the Petroleum Corporation Act were planned at present. Instead, the focus will be on creating a mutually beneficial environment for both Sri Lanka and the investors.

“We want to work with foreign investors on clear and fair principles. If there’s a win-win outcome – through tax revenue, employment, or technological advancement – then such investments should be welcomed,” he stressed.

The CPC plans to finalise the investment selection process within the next few months. The expansion is expected to significantly reduce reliance on fuel imports, stabilise the domestic energy market, and create substantial economic value for Sri Lanka.

The Sapugaskanda Oil Refinery, operated by the CPC, was originally commissioned in August 1969 with a processing capacity of 38,000 Barrels Per Stream Day (BPSD), equivalent to 5,200 MT per day.

It was specifically designed to process Iranian light crude oil, although it is also capable of handling similar grades such as Upper Zakum and Arab Light. Currently, the refinery contributes to approximately 30% of Sri Lanka’s petroleum product requirements, while the remaining 70% is fulfilled through the importation of refined products.

Over the past few decades, Sri Lanka has made multiple attempts to upgrade the Sapugaskanda Oil Refinery. Initial proposals in the 1990s and 2000s focused on improving the refinery’s efficiency and capacity, but limited funding prevented progress. 

In the early 2010s, discussions were held with the Indian Oil Corporation for a possible joint venture, although these talks collapsed over concerns related to ownership and strategic alignment. In 2014, under the Mahinda Rajapaksa administration, a renewed expansion plan was introduced, aiming to reduce the country’s reliance on imported refined fuel, but it stalled following political changes.

By 2017, the CPC proposed a modernisation project valued at around $ 2 billion to expand its capacity to 100,000 barrels per day, but it too was shelved due to lack of investor commitment. Meanwhile, focus began to shift towards a new refinery in Hambantota, backed by foreign partnerships, which further delayed development at Sapugaskanda.

In 2022, a preliminary feasibility study for upgrading the Sapugaskanda Refinery was completed.