EghtesadOnline: Sri Lanka is willing to source its demand for oil derivatives from Iran, Sri Lankan ambassador in Tehran said on Sunday.
"There is a lucrative market for oil products in Sri Lanka and the National Iranian Oil Company can play an active role in marketing and selling such commodities," Sharif Anis was also quoted as saying by IRNA.
Pointing to other business opportunities in the country, Anis said, "Private and state enterprises can invest in plans to upgrade Sri Lanka's sole oil refinery and double its capacity to boost output and reduce the cost of importing refined fuels."
Stressing the need for promoting ties between the two countries in economic and energy fields, Anis said the removal of international sanctions [against Tehran under the 2015 nuclear deal] has prepared the ground for further development of ties and Sri Lanka is enthusiastic about expansion of relations with the Middle East country, Financial Tribune reported.
Reportedly, the island nation is home to a single oil refinery, Ceylon Petroleum Corp's decades-old 50,000 barrels-per-day plant. It was originally configured to run on Iranian crude and Sri Lanka had to import more refined oil products after international sanctions caused it to stop crude imports from Iran.
The official noted that CPC replaced Iranian crude with supplies from Malaysia and the UAE but the efficiency of processing the grades was low, which explains why resumption of light crude import from Iran is again on the table.
According to Sri Lanka's Petroleum Resources Minister Chandima Weerakkody, although some countries, including China, the US and India, have expressed interest in building new refineries in the eastern and southern port cities of Trincomalee and Hambantota, no final decision has been taken yet.
"The proposal is to improve the performance by upgrading the existing refinery and add another 50,000 barrels per day," he said.
"The revamped refinery will use a hydrocracker to expand its production of more valuable fuels such as gasoline, kerosene, jet fuel and diesel oil."
Weerakkody noted that Sri Lanka has started oilfield operations and is negotiating with oil-rich states, namely Iran, to tap into the new oil and gas resources, adding that the country is keen on cooperating with Iran to acquire the much-needed technology in drilling, exploration and refining sectors.
According to Weerakkody, in 2011, Sri Lanka refined more than 60% of its fuel consumption, but this has come down to around 35%. It could save around $400 million annually through higher crude imports.
"Sri Lanka's oil import bill plummeted 41% in 2015 versus the prior year to $2.7 billion not only due to the fall in world oil prices but also because of higher imports of refined oil," he said.