Sri Lanka-US trade deal at risk due to Chinese oil refinery

Sri Lanka or the National Petroleum Corporation have not received any assurances from Chinese energy giant Sinopec to purchase refined products from the company, which is set to build a $3.7 billion refinery in Hambantota, according to sources in the corporation.

Expressing disbelief over this, the Managing Director of the Ceylon Petroleum Corporation, Dr. Mayura Netthikumarage, told ‘The Sunday Morning’ that the government is considering allowing Sinopec to sell up to 40% of its production domestically.

However, he stressed that this is not an agreement between Sinopec and Ceylon Petroleum Corporation or other market participants.

“Basically, if the price is competitive, anyone can buy up to 40% of the total production, but there is no guaranteed agreement from the Ceylon Petroleum Corporation or any other party,” the Managing Director added.

The proposed Hambantota refinery has a processing capacity of 200,000 barrels of crude oil per day, and a significant portion of its output is to be allocated for export.

The trade balance between the two countries had to be reduced to reduce the tariffs imposed on Sri Lanka by the US, and as a step towards that, Sri Lanka has agreed to buy crude oil from the US. Accordingly, the Managing Director expressed his views on the issue of whether the purchase of Sinopec’s products would create any obstacle to the purchase of American crude oil.

“The products from Sinopec are refined products, not crude oil. Therefore, Sinopec products will not hinder Sri Lanka’s process of purchasing crude oil from the US. In addition, the Sinopec refinery will not hinder the operation of the Sapugaskanda refinery in Sri Lanka. The Sinopec refinery does not hinder the refining of the crude oil we buy at Sapugaskanda.

Sinopec is a Chinese state-owned oil and gas conglomerate based in Beijing. The company signed an agreement with the Sri Lankan government in January to quickly build a $3.7 billion refinery near the Hambantota International Port.

Meanwhile, US-based RM Parks has partnered with Shell Brands International to open Shell-branded fuel outlets in Sri Lanka. Scheduled.