Oil Deal

April 04, 2008 (LBO) –Sri Lanka is seeking to renew its long-term crude oil supply contract with Iran and wrap up financing to expand its refinery during a visit this week by senior government officials to Teheran. Treasury Secretary P B Jayasundera and Ashantha de Mel, chairman of the state-oil refiner Ceylon Petroleum Corporation, are to hold talks with Iranian government and oil industry officials over the weekend.

De Mel told LBO that during his visit the CPC will renew its contract to buy crude oil from Iran, the island's main supplier of crude.

"We want to sign an agreement to buy crude for the next one year because the existing contract has expired and we need to re-sign it."

They will also discuss plans to double the capacity at the 50,000 barrels per day CPC refinery at Sapugaskanda, north of Colombo, which can now refine only about half the island's requirement.

Iran has promised to help modernise the refinery with funding and technical expertise.

The total project is expected to cost 1.2 billion dollars with Iran funding 80 percent of the cost and the CPC the balance.

Iranian experts have already begun a feasibility study on the project.

"We want to discuss the detai