The $3.7 billion oil refinery project by Sinopec in Hambantota—the largest Foreign Direct Investment (FDI) in Sri Lanka’s history—remains stalled even after six months, due to unresolved disagreements between the Sri Lankan government and the Chinese petroleum giant over local market share, Daily Mirror learns.
The landmark agreement was signed earlier this year during the official visit of President Anura Kumara Dissanayake to Beijing. It was formalized between Sri Lanka’s Ministry of Energy and Sinopec, one of China’s leading international oil and gas corporations.
As part of this investment, Sinopec plans to construct a state-of-the-art oil refinery in Hambantota with a production capacity of 200,000 barrels per day. A significant share of the refinery’s output is intended for export, which is expected to generate substantial foreign exchange earnings. According to the President’s Media Division (PMD), this investment will contribute significantly to Sri Lanka’s economic development and improve the livelihoods of low-income communities in the Hambantota region. The project is also anticipated to provide broader economic benefits to the Sri Lankan population in the near future.
However, Daily Mirror has learned that progress has been hindered by a key point of contention: Sinopec is seeking unrestricted access to the domestic market for its refined petroleum products, while the Sri Lankan government has proposed a 20 percent cap on its market share.
When contacted regarding the status of the project, a senior official from the Ministry of Power and Energy, speaking on condition of anonymity, confirmed that an agreement on the local market component has not yet been reached. He noted, however, that negotiations are ongoing and that both parties are working toward a resolution to enable the project’s commencement.
Commenting on other aspects such as land allocation and regulatory procedures, the official stated that these are minor issues and can be resolved without significant delays.
Meanwhile, Professor Liu Zongyi, Senior Fellow and Director of the Centre for South Asian Studies at the Shanghai Institutes for International Studies, previously noted that Sinopec has encountered obstacles in the project’s execution in Sri Lanka.
