Business

CPC’s oil storage facilities to be increased

  • Eyes new terminals in Trinco and H’tota

  • Feasibility report by August this year

  • Fuel bunkering project underway with Hambantota Port

 By Zahida Rizvi

 

Ceylon Petroleum Corporation (CPC) plans to expand its oil storage facilities in Sri Lanka by launching two terminals in Trincomalee and Hambantota, The Sunday Morning Business learns.

Speaking to The Sunday Morning Business, CPC Chairman Sumith Wijesinghe said that the CPC is currently in discussions with the Hambantota Port to obtain land for the expansion of the oil storage facility.

“The CPC has taken measures to increase the oil storage facility and has obtained the approval from the Hambantota Mahaweli Authority for the terminal to be launched,” Wijesinghe stated.

The CPC supplies approximately 80% of the national oil requirement, and the refinery at Sapugaskanda has the capacity to produce only 30% of this requirement. The rest is imported from various countries, particularly from the Middle East. However, currently, the Sapugaskanda Refinery meets only 25% of the national fuel demand, whilst 75% is imported internationally. The CPC supplies petroleum products to the country through its distribution channels that consist of 1,302 filling stations islandwide. 

In a bid to increase the crude oil processing capacity in the Sapugaskanda Refinery, according to documents released by the country’s Department of Government Information (DGI), the CPC had conducted a feasibility study last year to determine the scope and technical, operational, and financial feasibility of the planned 100,000 b/d (barrels per day) expansion with a focus on several alternative proposals.

Wijesinghe emphasised that the feasibility report will be available by the end of August this year and that meanwhile, the CPC has identified the need to increase its refining capacity by around another 100,000 b/d.

“The CPC plans to increase the refining capacity, which will be launched in the next two to three years, and the state enterprise is currently looking for an investor for the project,” he said.

The two additional refineries with a capacity of 100,000 b/d were proposed for Hambantota, in the new port and airport complex built in the South of the country in 2013. The project falls under the umbrella of investment that is expected to be part of a string of new projects for the port, including a projected liquefied natural gas (LNG) terminal, an industrial and commercial free trade zone, petrochemical plants, and other facilities. The refinery is anticipated by the CPC to supply an adequate bunkering facility at the port.

Additionally, the state-owned enterprise drew plans last year to open a tender to obtain a storage aviation fuel tank (jet A1) and start a fuel bunkering project with the Hambantota International Port Group.

The Sri Lankan Government, in an initiative to utilise the China Bay Tank Farm built by the British to supply their Indian Ocean and Pacific fleets during the Second World War, has decided to extend the services of the tank farm in Trincomalee. This collection of 101 large, 12,000 tonne-capacity storage tanks have been lying idle for a long period of time.

Lanka IOC is in charge of 14 of the 99 tanks that are still functional and plans to develop the others jointly with the CPC for the project. However, the project faced criticism throughout, with legal and technical issues in implementation being cited, although the CPC is confident that the project would soon progress in collaboration with Lanka IOC.

The project being utilised fully in Trincomalee would pave a path to establish it as a major bunkering centre. The tanks would also be able to link up to the new refinery, enabling the area to tap into the storage segment, and it will be to be useful for the regional oil providers considering the unpredictable global oil fluctuations, and it will also lead to less dependency on oil imports.

Furthermore, the CPC’s proposed new $ 50 million underground pipeline to carry jet fuel to Colombo’s Bandaranaike International Airport is taking shape. At present, the fuel is transported by rail from Ceylon Petroleum Storage Terminals Ltd.’s (CPSTL’s) storage facility at Kolonnawa. The facility is also undergoing a major upgrade to its existing pipelines, which carry oil from the landing stage at Dolphin Pier in Colombo. A tender worth some Rs. 8.7 billion ($ 59.3 million) has been issued for four 6 km lines to replace the existing 69-year-old tubes.