Sri Lanka to restart refinery with oil cargo from Dubai

Reuters: Ceylon Petroleum Corp (Ceypetco) will resume operation of Sri Lanka’s sole refinery, a 50,000 barrels-per-day facility, after a 10-day closure, because it has received a cargo of 75,000 tons of crude from Dubai, officials said.

Sri Lanka’s decades-old refinery is configured to run on Iranian crude and has been scrambling to fill a shortfall after Western sanctions prevented it from bringing in the crude from Iran. The sanctions have hurt its economy by forcing it to spend more to import oil and oil products.

The refinery was shut on 26 October after exhausting its supply of mainly Iranian crude oil, and its General Manager Susantha Silva said it would be shut until the country received the Dubai cargo.

“We have received a 75,000 MT crude cargo and everything is arranged to unload,” Silva said in an interview on Monday. “If all goes well, we’ll be able to resume operations from tomorrow.”

Silva declined to comment on the origin of the cargo, but an Oil Ministry official said it came from Dubai.

“The cargo came from Dubai the day before yesterday and everything is now ready to unload,” the official said, on condition of anonymity.

He said the island nation would receive an 80,000 ton crude cargo from Oman on Thursday, a 135,000 ton cargo from Saudi Aramco 13-15 November and another 135,000 ton shipment in December.



Silva last week said the December shipment was from Abu Dhabi.

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

Ceypetco has been having problems running the refinery at full capacity because alternative crudes such as Arabian light do not provide the proper yield, Silva said earlier.

The sanctions have so far compelled Sri Lanka’s $ 59 billion economy to spend an extra $ 1.2 billion on oil imports, Oil Minister Susil Premajayantha told Parliament last month.

Sri Lanka has reduced imports of Iranian crude by a fifth this year but disagrees with Western sanctions that are punishing countries that depend on the oil, Foreign Minister G.L. Peiris has said.

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

Ceypetco’s Sapugaskanda refinery was shut early in September also after damage to a floating pipeline at the Colombo Port.