A Cabinet Sub Committee is currently in the process of studying a project to upgrade the 46-yearold Sapugaskanda oil refinery, before calling for Tenders, Petroleum Minister Susil Premajayantha told the Sunday Times.
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| Susil Premajayantha |
This follows the Iranian government’s proposal in 2007, to finance part of the upgrade amounting to US$ 1.3 billion, which stalled midway.
Mr Premajayantha said that, to date, companies from India, including the Indian Oil Company (IOC), China, Czech Republic, the U.S. and Malaysia, have shown interest, sans any specific proposal.
He said that, though the Sapugaskanda refinery needs expansion, if the expansion takes place, the refinery would have to be completely shut down. “But, with the current issues over purchase of fuel from Iran, we have to be mindful when we undertake the project, as all fuel requirements would have to be imported during that period,” he added.
Presently, the Sapugaskanda refinery has the capacity to produce 50,000 barrels per day. “We use Italian technology. The efficiency of the refinery has reduced over a period of time. We fabricate parts for repairs, and carry on with difficulty. If it is to work more efficiently, it will involve high costs. We refine only 30% of our requirement today, and not all types of crude oil are refined here. Mostly Iranian light and Saudi light are used here, along with other sources that suit our work,” he added.
Mr Premajayantha said that, if the proposed Iranian project of 2007 went ahead, the refinery would have had the capacity of meeting 60% of our requirements.
He said that a 35-acre plot has been acquired for the purpose in Sapugaskanda, and an official appointed as its head. About 90% of the compensation has also been paid, and they were awaiting permission from the Environment authority.
The Corporation has 1,100 employees. “After renovation, we can take on extra orders from other countries”, he added.
He said that, in order to overcome the impact of US sanctions, currently, the Government has increased imports from Saudi Arabia and from Oman. “We have tested and found Oman crude oil to be acceptable”, he added.
He said that, similar to Japan, which has got a concession from the US to reduce fuel purchases from Iran by only 15 to 20%, Sri Lanka also expects to be able to purchase a reduced quota of fuel from Iran after July.
However, if we have a problem, it will not be an issue for this year, as problems would arise only next year.
Mr Premajayantha also said that the Government has no plans to sell any more fuel stations to the IOC.
Mr Premajayantha further added that they hope to expand the fuel tank farm used for aircraft refueling at the Bandaranaike International Airport, along with Mattala airport and Hambantota filling centre.
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