Sri Lanka and China Petroleum & Chemical Corporation (Sinopec) have finalized an agreement for the establishment of a major oil refinery in Hambantota.

Under the deal, Sri Lanka secures the right to purchase 20% of the refinery’s production, paving the way for significant economic benefits.

The selection of Sinopec, following a rigorous bidding process, signals a strategic partnership aimed at bolstering Sri Lanka’s energy security and economic prospects.

A Treasury official highlighted the advantages, emphasizing the nation’s ability to acquire fuel at a concessionary price, along with reduced freight charges and insurance benefits.The Hambantota refinery is expected to refine 100,000 barrels of crude oil daily in its initial phase, with plans for gradual capacity expansion.

Sinopec’s substantial investment of US$1.7 billion during the first stage, spanning four years, lays the foundation for anticipated overall investments exceeding US$4.5 billion in the long term.

In addition to fuel procurement, the agreement enables Sinopec to participate in Sri Lanka’s fuel supply tenders, leveraging its local refinery for potential bids.

The refinery is poised to play a pivotal role in the bunkering business, further solidifying the economic ties between China and Sri Lanka.

The collaboration is a significant milestone in fostering economic cooperation between the two nations, offering promising prospects for Sri Lanka’s energy sector and the broader economy.