The United States will soon oust China as Sri Lanka's single largest investor when it spearheads a US$ 2.5 billion investment into a petroleum refinery in the South, making the US$ 1.4 billion Chinese Port City pale into insignificance.
This will happen shortly with the world's largest oil refinery contractors, operators and managers – Fluor Corporation of USA spearheading a US$ 2.5 billion investment, backed by three or more international petroleum giants, catering to the local and export markets.
Ceylontoday, 2016-01-03 02:03:00 Read 2132 Times
BY Ravi Ladduwahetty
The United States will soon oust China as Sri Lanka's single largest investor when it spearheads a US$ 2.5 billion investment into a petroleum refinery in the South, making the US$ 1.4 billion Chinese Port City pale into insignificance.
This will happen shortly with the world's largest oil refinery contractors, operators and managers – Fluor Corporation of USA spearheading a US$ 2.5 billion investment, backed by three or more international petroleum giants, catering to the local and export markets.
Fluor, based in Texas and with worldwide representation, has topped the FORTUNE Magazine's Most Admired Companies in the Engineering and Construction List and has been ranked No. 1 for fourth consecutive year in 2015.
The designing of the project, which is also being done by UOP of USA, the world's largest oil refinery designer, has already begun and the physical construction will commence in six months, sources close to the deal told Ceylon Today.
It is also moot to know that UOP has also been instrumental in designing the Ceylon Petroleum Corporation's Sapugaskanda Refinery many years ago.
Fluor Corporation, which is a major player in the global petroleum industry, will be joined by other International petroleum players from Korea, Japan and China, who will participate in the funding, coinciding with the construction of the project, which will commence by around June 2016, they said.
The project will have a refining capacity of 100,000 barrels per day, when completed late 2018 or early 2019, will be for both the local market and export. This venture will significantly slash the local fuel prices as there is no freight cost in imports.
The deal has been struck with a group of senior management personnel who held very senior positions in the Ceylon Petroleum Corporation and made a comprehensive proposal to set up a petroleum refinery in Sri Lanka. What is all the more striking is that the project will proceed without any guarantees from the Government of Sri Lanka, they said.
These sources also pointed out the significance of the project, given that for over 15 years Sri Lanka has imported nearly 50 per cent of its requirement of diesel and petrol at an enormous cost as the CPC's refinery was not able to refine all of Sri Lanka's needs of fuel. CPC refinery now needs extensive upgrading and expansion to continue its operation and is now in search of funding to undertake the necessary modernization at Sapugaskanda.
A major Sri Lankan company has also evinced interest as an investor. The Government of Sri Lanka has requested that this be located at Hambantota.
It is reported that the Board of Investment of Sri Lanka was unable to give 500 acres in a single bloc near the Port in Hambantota.
Therefore, it will release adequate land already identified in two blocks both inside and outside the Port premises. Investments terms are expected to be finalized early this year. The area inside the Port will be for the refinery and the area outside the Port will be for the tank farm.
UOP has designed refineries worldwide and is easily the biggest refinery designer in the world. This refinery is expected to be in operation in late 2018 or early 2019. It will be an export-oriented refinery, which will have a significant impact on petroleum prices within Sri Lanka, while also ensuring its energy security.
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