13 March 2011

Global Energy to Set up a 150,000 bpd Refinery in Hambantota Magampura Port City

13th March 2011, www.thebottomline.lk, By Santhush Fernando

World renowned Global Energy has signed a Memorandum of Understanding (MoU) to set up a 150,000 bpd (Barrels Per Day) refinery in the emerging port city of Hambantota.

The refinery estimated to cost between US $ 1.5 to 2bn (Rs.166.5 to 222bn), is said to be thrice the size of the current state-run Sapugaskanda Refinery and will mainly refine crude oil for the export market, with Hambantota poised to become a mega global hub in energy, shipping and aviation.

A former Chairman of Ceylon Petroleum Corporation and a current director of Chevron Lubricants Lanka Plc is the local coordinator for the project while a former DGM of CPC and a Geology professor of University of Peradeniya is also involved in the project. Already they have 24 employees with them,” a high ranking official of the Ministry of Petroleum Industry told The Bottom Line.

However, he added that it was unfortunate that the line ministry was not kept informed that a MoU on a petroleum industry-related project was signed.

“No one knows which government institution has signed this MoU. The Ministry Secretary Titus Jayawardene was not aware of these developments. How can the ministry take a proper decision on whether to go ahead with the US $ 2.2bn Sapugaskanda Project if it is not aware of the private project! The Ministry or the CPC cannot gamble with funds because these are public moneys which the country must repay later on. If the private refinery is coming up, it is good because we may not have to find a staggering amount such as Rs. 244.2bn (US $ 2.2bn),” he lamented.

Numerous energy experts and think tanks have time and again emphasised the need to have a refinery in Hambantota if the country was to emerge as a global player in the energy industry.

“Various parties have applied for refineries in Hambantota. South Korea, ETA Ascon of Dubai and Petrochina subsidiary - China HuanQiu Contracting and Engineering Corporation that built the Muthurajawela tank farm, are among them. But Global Energy is said to have been eying this since 2000 and had also concluded a preliminary feasibility study. They seem to be very serious about the refinery project,” he added.

Meanwhile The Bottom Line exclusively reported last week that a high-powered government delegation was scheduled to visit Iran, in a bid to revive the Rs. 244bn Sapugaskanda Oil Refinery Expansion and Modernisation (SOREM) project that has been in the limbo since 2007 and to appeal Iranian authorities to extend repayment period up to twenty years.

In 2007, The Nation exclusively reported that UAE-based ETA Aston Group was planning to invest US 1.2bn in mega oil refinery in Hambantota, and had also identified a 400 acres of Mahaweli land in Mirrijjawila.

Last year, Petroleum Industries Minister Susil Premajayantha announced that he had received a proposal from Petrochina subsidiary - China Huanqiu Contracting and Engineering Corp to set up a refinery in the Hambantota district targeting the export market. Petrochina or China National Petroleum Corporation (CNPC) is China’s largest oil and gas producer and supplier, as well as one of the world’s major oilfield service providers and a globally reputed contractor in engineering construction, with a presence in nearly 70 countries.

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