Lankan Ranger
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China to finance US$1.5 Billion oil refinery expansion in Sri Lanka
With an Iranian offer to upgrade the ageing Sapugaskanda oil refinery failing to click, China is now likely to fill the void by pumping in the required external financing to the tune of US$ 1.5 billion.
Chinese bank is already studying the feasibility reports on the proposed expansion from 50,000 barrels per day to 100,000 barrels, discussions in this regard with the Ministries of Finance and Petroleum are yet at a very early stage.
According to authoritative sources, because of the faith China has in Sri Lanka, a Chinese State bank has already signed a fresh Memorandum of Understanding with the Treasury to finance more projects, in the next three years, to the tune of US$1.5 billion.
Sources said since only project proposals in respect of the Sapugaskanda expansion are ready at the moment, the entire loan package was likely to go into it. The only other project in the horizon, sources said, was the Moragahakanda project, but there, the Irrigation Department has yet to come up with the project proposals.
Sources said the feasibility report drawn up by the Singapore subsidiary of British firm KBC Advanced Technologies has two additional components a Hydro Cracker plant and a Delayed Coker unit. A Hydro cracker plant was first mooted when Cyril Mathew was the Industries Minister in the JRJ government. It is to reprocess the large volume of residual oil produced by Sapugaskanda plant (40 per cent of its current output) into quality diesel and petrol. A Delayed Coker unit has the function of turning final residue into carbon to generate power.
Under the revised proposals of the UK firms study the total cost of the expansion and modernization has been put at US$2.0 billion, according to sources.
The independent feasibility study for the Sapugaskanda Oil Refinery Expansion and Modernisation (SOREM) was given early last year to independent consulting firm the United Kingdom-based KBC Technologies.
Under the contract, KBC Advanced Technologies completed the feasibility and Front-End Engineering and Design (FEED) studies by late last year.
By manufacturing Sri Lankas total requirement of refined petroleum products within the country itself, it is estimated that a staggering US$ 300million would be saved each year. As the total cost can be recovered in less than seven years, the project is financially attractive, sources said.
At present, CPC is hampered by capacity inadequacy of its refinery and has to import 50 per cent or nearly 50,000 barrels a day as refined products (petrol and diesel) at very exorbitant prices with only the balance produced locally. Though the Sapugaskanda refinery was built to refine 50,000 barrels per day, because of its age it refines only about 40,000 per day now, sources said.
The Island
With an Iranian offer to upgrade the ageing Sapugaskanda oil refinery failing to click, China is now likely to fill the void by pumping in the required external financing to the tune of US$ 1.5 billion.
Chinese bank is already studying the feasibility reports on the proposed expansion from 50,000 barrels per day to 100,000 barrels, discussions in this regard with the Ministries of Finance and Petroleum are yet at a very early stage.
According to authoritative sources, because of the faith China has in Sri Lanka, a Chinese State bank has already signed a fresh Memorandum of Understanding with the Treasury to finance more projects, in the next three years, to the tune of US$1.5 billion.
Sources said since only project proposals in respect of the Sapugaskanda expansion are ready at the moment, the entire loan package was likely to go into it. The only other project in the horizon, sources said, was the Moragahakanda project, but there, the Irrigation Department has yet to come up with the project proposals.
Sources said the feasibility report drawn up by the Singapore subsidiary of British firm KBC Advanced Technologies has two additional components a Hydro Cracker plant and a Delayed Coker unit. A Hydro cracker plant was first mooted when Cyril Mathew was the Industries Minister in the JRJ government. It is to reprocess the large volume of residual oil produced by Sapugaskanda plant (40 per cent of its current output) into quality diesel and petrol. A Delayed Coker unit has the function of turning final residue into carbon to generate power.
Under the revised proposals of the UK firms study the total cost of the expansion and modernization has been put at US$2.0 billion, according to sources.
The independent feasibility study for the Sapugaskanda Oil Refinery Expansion and Modernisation (SOREM) was given early last year to independent consulting firm the United Kingdom-based KBC Technologies.
Under the contract, KBC Advanced Technologies completed the feasibility and Front-End Engineering and Design (FEED) studies by late last year.
By manufacturing Sri Lankas total requirement of refined petroleum products within the country itself, it is estimated that a staggering US$ 300million would be saved each year. As the total cost can be recovered in less than seven years, the project is financially attractive, sources said.
At present, CPC is hampered by capacity inadequacy of its refinery and has to import 50 per cent or nearly 50,000 barrels a day as refined products (petrol and diesel) at very exorbitant prices with only the balance produced locally. Though the Sapugaskanda refinery was built to refine 50,000 barrels per day, because of its age it refines only about 40,000 per day now, sources said.
The Island
