Friday, November 1, 2019

U.S. company to modernise Sapugaskanda oil refinery


The U.S. based Honeywell UOP has won a contract in Sri Lanka to design improvements and upgrade the state-run Ceylon Petroleum Corporation's crude oil refinery. Secretary of the Ministry of Petroleum Resources, Sunil Hettiaarachchi told the media that the contract is going to Honeywell UOP, previously known as UOP LLC or Universal Oil Products, a multinational company.

He said the project was planned to upgrade the machinery, allowing the Ceylon Petroleum Corporation to increase production at the refinery from the current capacity of 50,000 barrels per day to 70,000 barrels.
The Secretary of the Petroleum Ministry highlighted that the company was selected after calling for tenders as per the International Competitive Bidding (ICB) methodology, and the only bidder was the U.S. firm. The firm also had previous experience in building Sapugaskanda's new refinery.  Under the three-year project. which is expected to begin in the latter part of 2019, the first year of the project is dedicated to designing and the next two years is for construction.
The central crude distiller column would be removed under the plan to increase the efficiency of the refinery. Also, the company will modernise the oil refinery to raise its capacity from 500 Mt to 1000 Mt. Mr. Hettiaarachchi said it was planned as such that the modernisation of the refinery would minimise the import of finished petroleum products taking it from 70% to 50%.
Only about 30 per cent of the oil requirement in Sri Lanka is currently refined by the state. The modernisation would also require the improvement of various types of crude oil. At present, only two classes are refined, Mr. Hettiaarachchi said.

OSL Take: The Sri Lankan government’s decision to re-commence the manufacture of Bitumen in the country is indicative of the growth in demand for the particular petroleum product. The statement by the Petroleum Minister of Sri Lanka also indicates a rapid increase in the country’s construction industry, which is a positive sign for foreign companies who are considering investing in Sri Lanka’s construction sector. Also, the Sri Lankan government’s decision to construct a second oil refinery indicates growing investment/business opportunities in the country’s petroleum sector. 
VBS/AT/20191101/Z_TB6

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