• Dispute relating to local market access finalised
• Implementation being negotiated

Sinopec has agreed to proceed with a 20% local market access cap for its $ 3.7 billion refinery project in Hambantota, with the parties currently finalising the implementation agreement for the project, the Ministry of Energy reveals.

Speaking to The Sunday Morning Business, Ministry of Energy Secretary Prof. Udayanga Hemapala stated that the much-discussed dispute over local market access, widely cited as the reason for the delay in implementing Sinopec’s $ 3.7 billion refinery project, had been resolved. 

Accordingly, he noted that Sinopec had now agreed to the 20% local market access cap insisted upon by the Government.

“[The dispute relating to local market access] has basically been finalised. They have agreed to the 20% local market access cap,” he stated.

Commenting on the current status of the project’s implementation, Prof. Hemapala stated: “It has not been finalised yet. We are in the process of finalising it.”

He further stated that the parties were negotiating the implementation agreement in relation to the project at present. 

However, he declined to provide a timeline for the project’s commencement, noting that it was premature to do so. He added that he was unable to comment on a timeline until the negotiations were concluded.

However, during the recent visit of Chinese Foreign Minister Wang Yi to Sri Lanka, Minister of Foreign Affairs Vijitha Herath stated that the Government expected to finalise the agreement for the Sinopec oil refinery project in Hambantota in the first quarter of 2026.

The Sinopec oil refinery project, valued at $ 3.7 billion, is the largest Foreign Direct Investment (FDI) in Sri Lanka’s history.

Sinopec signed an initial agreement with the Sri Lankan Government in January 2025 to accelerate the development of the Hambantota refinery located near the Hambantota International Port. 

This proposed refinery will have a processing capacity of 200,000 barrels of crude oil per day and a significant share of its output will be allocated for export.

The Ceylon Petroleum Corporation (CPC) operates the country’s only existing refinery in Sapugaskanda, which has a capacity of 50,000 barrels per day.