CPC to shut refinery after exhausting crude supply

• Next crude shipment due on 8-9 Nov. from Dubai
• CPC struggles to buy Iranian oil due to Western sanctions
• Refinery configured to run on Iranian crude

SINGAPORE/COLOMBO (Reuters): Ceylon Petroleum Corp (Ceypetco) will shut Sri Lanka’s sole 50,000 barrels-per-day oil (bpd) refinery for two weeks on Friday after exhausting its supply of mainly Iranian crude oil, a company official said.

The company has enough crude to last until Friday and will receive its next crude oil shipment from Dubai on 8 or 9 November when the refinery will restart, Ceypetco General Manager Susantha Silva told Reuters.

The refinery will also undergo maintenance during the shutdown, he added.

The refinery is configured to run on Iranian crude and has been scrambling to fill a shortfall after it was unable to bring in Iranian crude because of Western sanctions.

“This does not mean we are going to close down the refinery permanently. This will be a temporary closure,” said Silva.

“We are getting one crude parcel from Dubai on 8 or 9 November and one from Saudi Arabia on 13 November. Another one scheduled (from Abu Dhabi) in December. So we have lined up crude for refining.”

Exports from Iran, which is grappling with tough Western sanctions targeting its energy and petrochemical sectors, have fallen sharply as consumers struggle both to pay for the oil and to secure insurance cover for tankers to ship the crude.

Ceypetco has been having problems running the refinery at full capacity as alternative crudes like Arabian light are not able to give the refinery the proper yield, Silva said earlier.

Sri Lanka, which is dependent on Iranian crude oil, has reduced its Iranian crude imports by 20 per cent this year, but disagrees with Western sanctions that are punishing countries that depend on its oil, Foreign Minister G.L. Peiris said earlier this week.

The country is now in talks with Iran to find suitable payment method for its crude, as banks dealing with Iran have also been targeted by western sanctions. Iran has not offered any discounts on its crude, Peiris said.

US Secretary of State Hillary Clinton said in June the US would exempt Sri Lanka, among other nations, from financial sanctions because they have significantly cut purchases of Iranian oil.

Ceypetco’s Sapugaskanda refinery, on the outskirts of Colombo, was last shut early in September after damage to a floating pipeline at the Colombo Port.

The sanctions have so far defeated three attempts by Sri Lanka to obtain Iranian crude as the company struggles with getting shipping insurance and payment on the Iranian oil, Silva has said.