Govt. to revamp, double refinery capacity - Chandima

 Reuters: Sri Lanka plans to upgrade its sole oil refinery and double its capacity to boost output and to reduce the cost of importing refined fuels, the country’s Petroleum Resources Minister Chandima Weerakkody said on Monday.

The island nation is home to a single oil refinery, Ceylon Petroleum Corp’s (CPC) decades-old 50,000 barrels-per-day (bpd) plant. It was originally configured to run on Iranian crude and Sri Lanka had to import more refined oil products after US sanctions caused it to stop crude imports from Iran.

CPC replaced the Iranian crude with supply from Malaysia and Abu Dhabi but the efficiency of processing the grades was low.

“The proposal is to improve the performance by upgrading the existing refinery and adding another 50,000 barrels per day,” Weerakkody told Reuters in an interview.

The revamped refinery will use a hydrocracker to expand its production of more valuable fuels such as gasoline, kerosene, jet fuel and diesel oil, he said.

“All this is estimated at $ 2.2 billion. But my feeling is this can be done less than that, somewhere around $ 1.6-1.7 billion.”

Though some countries including China, the US and India have expressed interest to build new refineries in the eastern and southern port cities of Trincomalee and Hambantota, there has been no final decision yet, he said.

The Government on Sunday said the ministry of development strategies and international trade is discussing investment proposals in Hambantota with foreign investors, including for a second oil refinery.

Sri Lanka in 2011 refined more than 60% of the total fuel consumed in the country, but now this has come down to around 35%, petroleum ministry officials said.

Weerakkody said the country could save around $ 400 million annually through higher crude imports.

Sri Lanka’s oil import bill plummeted 41% in 2015 versus the prior year to $ 2.7 billion mainly due to the fall in world oil prices, but also because of higher imports of refined oil.

Weerakkody said the country is in discussion with Iran to resume crude imports, but has not done so because of a ban on bank transactions with Iran.

Sri Lanka considers purchasing LNG from Qatar

As demand for Liquefied Natural Gas (LNG) is growing in Sri Lanka, the government is considering purchasing the super chilled fuel from Qatar, world’s biggest exporter of LNG, according to a report in the Gulf Times.

Sri Lanka’s Ambassador in Doha Prof. W.M. Karunadasa has said that he plans to propose the possibility of purchasing LNG from Qatar during Sri Lankan President Maithripala Sirisena’s state visit to Doha later in the year.

“My aim is to push for signing of more agreements, particularly in the energy sector,” Prof. Karunadasa has said on Saturday.

He said Sirisena’s proposed Qatar visit reciprocates Emir Sheikh Tamim bin Hamad al-Thani’s state visit to Sri Lanka in March 2015, where the Qatar government expressed willingness to support the gas and oil exploration activities in Sri Lanka.

Karunadasa said that LNG from Qatar could be imported through the Port of Colombo, Gulf News reported.

“China is now developing a large hub in our port city, which is a main distribution point to adjacent countries. Even in the ancient times, the Port of Colombo was a central hub for trade and other economic activities with many countries,” the ambassador said.

The sharp fall in LNG prices during the last one year has made it attractive for Sri Lanka to pursue gas based power generation.

Government officials hope this move will help the country to move away from polluting fuel sources such as coal. The government has decided to consult the Indian and Japanese governments to invest in LNG based power plants.