Recently, the $3.7 billion refinery project between Sinopec Group and Sri Lanka has achieved significant breakthroughs. The project is located near Hambantota Port and is planned to process 200000 barrels of crude oil per day (with an annual production capacity of approximately 10 million tons). It will fully utilize the shipping hub advantages of Hambantota Port and create an energy supply center that radiates to South Asia and the Middle East. After the project is put into operation, it is expected to meet 40% of Sri Lanka's demand for refined oil products, and the annual export revenue is expected to reach 6-8 billion US dollars, becoming an important pillar for the country to alleviate foreign exchange pressure and promote economic recovery.

The only existing Sapugaskanda refinery in Sri Lanka was built in 1969 and has a daily production capacity of only 38000 barrels, which is far from meeting domestic demand. During the 2022 economic crisis, energy shortages triggered social unrest, highlighting the urgency of energy independence. In addition to the Sinopec project, Sri Lanka also plans to invest $3 billion to expand its existing refinery, increasing its daily processing capacity from 38000 barrels to 150000 barrels.

As a key project of China Sri Lanka cooperation, Sinopec will introduce advanced environmental protection technologies such as carbon capture and clean production, which are expected to create tens of thousands of job opportunities and enhance the professional abilities of local employees through technical training. Previously, Zhongyuan Oilfield had completed the operation and maintenance project of the Hambantota Port oil depot, accumulating localized experience for the subsequent operation of the refinery.

Although the project has entered the start-up phase, the final investment agreement and commencement date have not yet been officially finalized. The Sri Lankan Minister of Energy previously stated that the project land and supporting facilities are in place and are expected to be completed within three years. If all the terms are successfully reached, the Hambantota Refinery is expected to start production around 2028.

Industry analysis believes that this project is not only a milestone in China Sri Lanka economic cooperation, but will also have a profound impact on the energy supply pattern in South Asia. The negotiation results of the core terms between the two parties and the public disclosure of the environmental impact assessment report will become key observation points for the progress of the project. Editor/Yang Beihua