Sri Lanka to close oil refinery as crude supply dries up

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ECONOMYNEXT – Sri Lanka will close its state-run refinery from March 21 as a crude supply and hopes to restart operations by April if short-term tenders that have been launched receive good response, an official said.

The Sapugaskanada refinery will be temporarily closed starting Monday, but we will reopen it as soon as possible.

“We have already issued short-term tenders for April and we hope we will get a good response for those,” Ceylon Petroleum Corporation Chairman Sumith Wijesinghe said in a recorded statement.

In the meantime, we have launched long-term tenders and we have concluded agreements, and with these agreements from April, we will be able to have a continuous supply of crude oil.

The refinery can only use certain grades of light crude and has a low yield of light distillates. It is, however, an important source of heating oil and naphtha for the electricity sector.

Sri Lanka has been unable to unload cargoes of refined fuels as money printing has triggered currency shortages creating queues of fuel and gas.

“Usually a shipment of 90,000 metric tons of crude that we import costs around US$40 million,” Wijesinghe said.

But due to rising fuel prices in the international market, we have to pay around $60-70 million per vessel.

Wijesinghe said the arrival of refined fuels from India’s line of credit will help ease the shortage in the country.

CPC has a contract to get fuel on 160-day credit terms, which will help, he said.

Meanwhile, union officials claimed crude on credit was not due until June. (Colombo/Mar19/2022 – Update II)

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