Chinese petrochemical company Sinopec to enter Lankan fuel market
Sinopec, the biggest petrochemical company in China, is likely to enter the Sri Lankan market for fuel importing, distribution and selling petroleum products, informed sources said.
Cabinet of Ministers in June approved a proposal to allow more companies from oil-producing nations to import oil and start retail operations in Sri Lanka.
The proposal, prompted by severe foreign exchange shortage, was tabled by Power and Energy Minister Kanchana Wijesekera.
At present, 90 percent of Sri Lanka’s fuel supply is through the State-owned Ceylon Petroleum Corporation, and the remaining 10 percent by Lanka IOC.
Sinopec is already present at the Port of Hambantota where it operates an oil depot. The Hambantota tank farm was issued the FSS certification (Fitness for Service) by Lloyd’s Register in April 2020.
China Petroleum and Chemical Corp, known as Sinopec Corp, said on Monday it has set up a fuel oil company in Sri Lanka as it looks to supply fuel to ships along a major maritime route.
The new unit, called Fuel Oil Sri Lanka Co Ltd, has been registered in Hambantota on the southern tip of the country, according to a report on the website of Sinopec Group, parent of Sinopec Corp.
Fuel oil is a refined product mostly used as bunker fuel for ships and is also burned in power stations.
The move marks the latest investment in Sri Lanka by China, which sees the South Asian island nation as a pivotal part of its Belt and Road Initiative infrastructure plan.
Sinopec stressed the strategic location of Hambantota port on the Indian Ocean along a key shipping route between the Suez Canal and the Malacca Strait, which is transited by two-thirds of global oil shipments. The market to supply fuel to ships had “huge” potential, it said.
In March, India’s Accord Group and Oman’s Ministry of Oil and Gas signed a $3.85 billion deal to build a 200,000 barrel-per-day oil refinery near Hambantota port, in the biggest single pledge of foreign direct investment ever made in Sri Lanka.
China Merchants Port Holdings, China Harbour Engineering Corp and other Chinese companies are investors in the port and industrial zone.
Sinopec has set a company-wide target of 10 million tonnes of production capacity by 2020 to supply low-sulphur bunker fuels that meet the cleaner emission standards set by the International Maritime Organization (IMO).
Saudi Arabian Oil Company (Aramco) has signed a memorandum of understanding (MoU) with China Petroleum and Chemical Corporation (Sinopec) covering multiple areas of potential collaboration between both the parties in Saudi Arabia.
This association will strengthen relationships with Sinopec and support strategic investments in Saudi Arabia.
The MoU has outlined pathways for strategic cooperation between Aramco and Sinopec and support the long-term relationship between the two companies and their existing joint ventures in China and in Saudi Arabia.