US engineering giant to re-energise Sapugaskanda Oil Refinery
Wednesday, 15 October 2014 00:57
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The Sapugaskanda Oil Refinery Expansion and Modernisation Project (SOREM) is poised to move beyond just a blueprint towards becoming a reality.
After an exhaustive screening process that involved receiving and evaluating over 20 proposals and short-listing five, the Ceylon Petroleum Corporation (CPC) and the Ministry of Petroleum have selected a joint proposal by S.S. Lootah Group, a UAE-based international energy corporation, and Ventech Engineers LLC, a US-based corporation with global expertise and a proven track record in engineering, designing and building refineries. Ventech also specialises in gas processing, petrochemical process units and associated equipment.
The refinery expansion, when completed, will be able to refine 100,000 barrels of crude oil a day, three times the current capacity of the Sapugaskanda refinery. It will also incorporate a hydrocracker that will refine the residual gas oil left over from the initial refining processes to produce additional jet fuel, kerosene, and diesel. When the expansion and modernisation work is completed, the Sapugaskanda refinery will provide Sri Lanka with the finished fuel products that are required to meet the demands of a growing economy now and well into the future.
The new refinery will also be one of the most efficient refineries in South Asia, with refined products carrying the ‘Euro Specification’ for fuel standard. When the SOREM project is complete, Sri Lanka will be much closer to reducing its energy dependency, which will in turn strengthen its national security.
The complex evaluation process considered the following criteria: The overall cost for the expansion and modernisation of the existing refinery, the state-of-the art technical solution, the competency of the business entity, the non-governmental financing proposal, and the time period required to complete the project.
The winning joint proposal brought together a consortium of international bankers, used Ventech’s world-class experience and expertise in refinery design and fabrication, proposed the shortest time to completion, and cost 40% less than all of the other proposals evaluated by the Government. CPC officials stated: “The joint Lootah and Ventech proposal was the most comprehensive proposal received and it received the highest evaluation score in the head to head competition.”
The winning joint proposal outlined a solution that used state-of-the art technology including Honeywell Universal Oil Product’s (UOP) world-renowned licensed technology, a construction process able to deliver an operational refinery at least 18 to 24 months earlier than the next closest proposal, and a financing proposal for 100% of the projected cost, pre-approved by an international consortium of banks including the US Ex-Im Bank, J.P. Morgan Bank, Dubai Islamic Bank and Deutsche Bank.
In addition to S.S. Lootah Group and Ventech Engineers, two internationally recognised firms will be part of this project, the accounting firm Ernst and Young, and the legal firm D.L.A. Piper.
The Governments of Sri Lanka and the United States will be hosting a Business Networking Conference this week to explore trade and investment opportunities in Sri Lanka. The talks will be part of the 11th Joint Council Meeting under the US-Sri Lanka Trade and Investment Framework Agreement (TIFA).
The organisers of the event have stated that economic development with the United States has the potential to play significant role in transforming the challenges of post-war reconstruction and ethnic reconciliation into opportunities for US businesses in Sri Lanka.
As per the office of the United States Trade representative, Sri Lanka is currently the 72nd largest goods trading partner with $2.8 billion in total (two way) goods trade during 2013. Goods exports totalled $314 million; goods imports totalled $2.5 billion. The US goods trade deficit with Sri Lanka was $2.1 billion in 2013.
It is a major step in closing the substantial trade deficit that has existed between the US and Sri Lanka. Achieving a closer balance of trade would serve the interest of strengthening economic and political ties between the two countries. Once completed, this venture will be a $ 1.5 billion project for CPC; the nearest competitor is 40% over for a less-equipped refinery.
