Sapugaskanda oil refinery facing another closure?

Although the Sapugaskanda Oil Refinery has resumed operations after receiving 90,000 metric tonnes (MT) of crude oil, the Petroleum Trade Unions Confederation (PTUC) has warned that the refinery would have to be closed again, as no crude oil has been ordered to be delivered to Sri Lanka by the time the said stock is utilised.

Speaking to The Morning, PTUC Convener Ananda Palitha said: “The Sapugaskanda Oil Refinery has now resumed operations after receiving 90,000 MT of crude oil, but that stock of crude oil would only be sufficient for a period of 15-20 days. 

“At the end of that stock, Sri Lanka needs to get another stock of crude oil if the refinery is to continue its operations. However, no agreement has yet been signed to obtain such a stock.” 

He noted that if the refinery operates at maximum capacity, 90,000 MT of crude oil would be refined within about 15 days. In addition, if it is operated at a lower capacity, he said that the amount of crude oil would be sufficient for about 20 days. However, he noted that when the crude oil is being refined at a lower capacity, issues may arise with regard to the quality of the fuel produced.

Claiming that no agreement has been reached with any country to purchase a consignment of crude oil so far, Palitha added that a ship carrying crude oil would not arrive in the country for a period of at least the next 30 days. Therefore, he said, refining operations would have to be halted once again when the 90,000 MT of crude oil that has been received has been refined. He noted that when the operations of the refinery are suspended in that manner, the country would lose billions of rupees due to having to pay the workers’ salaries.

“It is extremely dangerous to have to close the refinery again and again in this way. All these problems have been created because the Government is not dealing with Russia regarding the procurement of crude oil and fuel. At present, India is getting crude oil from Russia at a lower price. So the Government has to start talks with Russia and take the necessary steps to get crude oil from there,” he added.

However, when contacted by The Morning to inquire about this, Power and Energy Ministry Secretary M.P.D.U.K. Mapa Pathirana stated that steps would be taken to bring in another consignment of crude oil to Sri Lanka within 14 days from the date of the resumption of refining operations at the refinery (1 June).

“We will bring back another consignment within 14 days. In addition, we have planned another option too. We will not allow another suspension of refinery operations.”

When asked as to what that option was, he said it was difficult for him to explain it to the media at this point.

In March, the Sapugaskanda Oil Refinery was closed indefinitely due to the shortage of crude oil, which was caused by the US dollar deficit in the country. The Refinery had to suspend its operations on two previous occasions due to the same issue. Meanwhile, Minister of Power and Energy Kanchana Wijesekera said last week that the Refinery would resume its operations with a crude oil shipment being unloaded on 27 May.