Sri Lanka seeks investors to double Sapugaskanda refinery output

The proposed upgrade will double the refinery’s capacity to 100,000 barrels of crude oil per day. Established in 1969, Sapugaskanda currently meets only about 30% of Sri Lanka’s fuel demand. Energy officials noted that refining imported crude oil is generally cheaper than importing finished petroleum products, but the refinery is designed to process only certain types of crude, requiring significant modifications to handle supplies from countries such as the United States.

The project will be implemented under a Build-Operate-Transfer (BOT) arrangement, with EOIs due by September 26 this year. Officials stressed that the expansion is critical to reducing reliance on imported refined petroleum and enhancing the country’s energy security.

The announcement comes as Sri Lanka weighs competing foreign-backed refinery projects. In Hambantota, China’s Sinopec has pledged US$3.7 billion to build a 200,000 barrel-per-day export-oriented refinery near the Chinese-run Hambantota Port, though the project has been delayed by regulatory and logistical hurdles.

Meanwhile, in Trincomalee, a tripartite venture involving India, the United Arab Emirates (UAE), and Sri Lanka aims to transform the eastern port city into a major energy hub. Plans include redeveloping the oil tank farm, constructing new pipelines, adding bunkering facilities, and potentially building a new refinery. Analysts see the project as part of India’s broader strategy to counter China’s expanding influence in the Indian Ocean Region.