Sole refinery shut after pipeline damage

Tuesday, 4 September 2012 00:57 - - {{hitsCtrl.values.hits}}

Reuters: Sri Lanka has shut its sole 50,000 barrels-per-day oil refinery for a few days after damage to a floating pipeline at the Colombo port, an official said on Monday.

The shutdown is unlikely to have a large impact on the Asian diesel market as Sri Lanka’s gasoil demand is lower than usual at the moment due to the monsoon season, traders said.

The island nation’s petroleum ministry said the Sapugaskanda refinery on the outskirts of the capital was shut on Saturday after the damage on Aug. 31, which compelled a ship carrying 135,000 tonnes of crude oil to wait at the port.

The shutdown has prompted state-run Ceylon Petroleum Corp (Ceypetco) to seek additional oil products to manage the supply shortfall.

“Engineers have been working since Friday to repair the damaged pipeline and are waiting for spares from abroad,” petroleum ministry spokesman W.P.M. Pradeep Roshen told Reuters.

“It will take a few days to repair,” he said in reply to a question on when the refinery would resume operation.

Ceypetco is seeking 300,000 barrels of gasoil and 40,000 tonnes, or about 260,000 barrels, of high sulphur fuel oil for mid-September delivery, to make up a possible shortfall amid the temporary closure of the decades-old refinery.

Ceypetco on Aug. 22 awarded a tender to buy 40,000 tonnes of fuel oil to a little known company called Bumi Siak Pusako after removing oil trader Vitol SA from its supplier list over fuel quality concerns. [ID: nL4E8JM3IY]

The company restarted its Sapugaskanda refinery on Aug. 10 after having closed it for maintenance on July 2, which prompted its purchase of nearly 2 million barrels of oil products, about double its usual monthly import volumes.