Sri Lanka has signed an agreement with Sinopec, the Chinese international petroleum corporation, to construct a US$3.7 billion oil refinery in Hambantota, as Anura Kumara Dissanayake continued his visit to Beijing today.
The facility, with a processing capacity of 200,000 barrels per day, will primarily serve export markets, enhancing the country’s foreign exchange earnings, according to Minister of Transport, Highways, Ports, and Civil Aviation Bimal Rathnayake.
The project, initially proposed during Ranil Wickremesinghe’s presidency, has been under discussion for several years. Former Energy Minister Kanchana Wijesekera previously engaged with Sinopec representatives, who confirmed plans to double the refinery’s capacity from earlier estimates. Sri Lanka’s cabinet approved the investment in November 2023, originally valued at $4.5 billion.
Sinopec, the world’s largest refiner, finalized a feasibility study in mid-2024 to decide between constructing a 160,000-barrel-per-day refinery or two 100,000-barrel-per-day facilities. The refinery will be located at Hambantota Port, managed by China Merchants Port Holdings.
Sri Lanka’s current refining capacity is limited to 38,000 barrels per day at the Sapugaskanda refinery, built in the 1960s by Iran. The new refinery is expected to address this gap while bolstering energy infrastructure on the island.
The announcement came as Dissanayake met with Chinese Premier Li Qiang in Beijing today. More than a dozen Memorandums of Understanding (MoUs) were signed between the two governments as Xi Jinping hosted the Sri Lankan president yesterday.
