CPC refinery faces closure over supply delay, maintenance

Reuters:  Sri Lanka’s sole refinery faces temporary closure this week for upto four days over a delayed crude oil delivery that coincides with plans for routine maintenance, officials said.

The decades-old 50,000 barrels-per-day oil (bpd) refinery is configured to run on Iranian crude and has been scrambling to fill a shortfall after supplies were hit by Western sanctions.

State-run Ceylon Petroleum Corporation (CPC) was expected to receive a crude parcel of 1 million barrels on Saturday, Sri Lanka’s petroleum resource minister said.

The supplier missed the original delivery date because of a problem with the vessel, Anura Priyadarsha Yapa told Reuters.

“Later they confirmed they would deliver on the 16th,” the minister added. “If the ship doesn’t arrive by May 16, we can’t produce.”

Refinery officials said the crude shortage coincided with a 1-1/2-day closure for routine maintenance.

“We will be stopping for maintenance for one-and-a-half days, but otherwise if the crude shipment doesn’t come on 16th, we may have to close it for 3 to 4 days,” said Susantha Silva, managing director of the state-run refiner.

Silva declined to name the company behind the delay, saying it would face action, with an inquiry underway.

Sri Lanka, which is dependent on Iranian crude oil, cut imports of Iranian crude by 23 percent last year, but disagrees with the Western sanctions, saying they punish countries that depend on the oil.

The CPC has been having problems running the refinery at full capacity as alternative crudes, such as Arabian Light, are unable to produce the proper yield.

The refinery was closed for two weeks in late October after exhausting crude supplies from Iran, but restarted after Sri Lanka imported a cargo from Dubai.

The Sapugaskanda refinery, on the outskirts of the capital, Colombo, was also shut early in September after damage to a floating pipeline at Colombo port.

Silva has said the sanctions have defeated three attempts by Sri Lanka to get Iranian crude, as CPC struggles to get shipping insurance and payment on the Iranian oil.