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China's SINOPEC Aiming Sri Lanka's Export-Oriented Refinery Market amid geopolitical concerns
China's SINOPEC Aiming Sri Lanka's Export-Oriented Refinery Market amid geopolitical concerns

China's SINOPEC Aiming Sri Lanka's Export-Oriented Refinery Market amid geopolitical concerns

  • 17-Apr-2023 11:02 AM
  • Journalist: Bob Duffler

Colombo [Sri Lanka]: SINOPEC, China's second-largest oil and gas producer and the nation's top supplier of oil and petrochemical products has expressed interest in Sri Lanka's export-focused oil refinery. The close ties between the two nations have been exploited to advance China's agenda internationally, thus this action has prompted questions about China's objectives.

The Sri Lankan government accomplished significant projects including the Hambantota Port, Mattala International Airport, Norochchole Coal Plant, and Colombo Nelum Tower by taking on enormous debt. The Norochchole power plant was the sole endeavour that actually served a purpose. China made Sri Lanka fall into a debt spiral by providing funding for large-scale projects. Sri Lanka is currently apprehensive to accept additional loans and investments from China.

In order to identify qualified investors for the project, the Sri Lankan government issued a request for tenders. China Petroleum and Chemical Corporation (SINOPEC) in China and 5 international nations each filed a bid for this project. To identify qualified investors for the project, the Sri Lankan government issued a request for tenders. China Petroleum and Chemical Corporation (SINOPEC), a Chinese company, and five other countries, including Dandeniya Engineering and Trading Company of Sri Lanka, Vitol Group of Singapore Pvt, Malaysia Petrichor Capital Sdn Pvt, Grant and Shearer Company of Nigeria, Matin Tejarat Co. of Iran, Ltd Company, and Singapore's Vitol Group, each submitted a bid for this project. China's "SINOPEC" firm was chosen as the project's top competitor among the qualified applicants.

Additionally, the current administration indicated that China is prepared to begin a brand-new, significant project in Hambantota. According to the news, China will invest in the construction of a sizable oil refinery in Hambantota with an export focus. There have been concerns expressed about the openness of the Sri Lankan and Chinese governments in carrying out this work, despite the fact that preliminary work on this enormous project, which is being driven by China, has already begun. The project will nonetheless proceed under the "Built, Own, and Operate" paradigm, according to the Ministry of Power and Energy. The government plans to build a petroleum refinery with an export focus and a centre for processing related products in the Hambantota area.

China may secure the highly sought-after project, while the decision to award the tender to China is still up in the air. The two most qualified organisations among the shortlisted competitors are SINOPEC of China and Vitol Group of Singapore. But according to reports, the Sri Lankan government has endorsed SINOPEC, selecting it as the ideal applicant to handle the project. Our company has received a substantial land grant from the Sri Lankan government in the area of the Hambantota International Port totalling 1.6 square kilometres. 100,000 barrels of oil are expected to be produced daily from this business.

The Hambantota port project was first developed by acquiring loans at interest rates greater than 6%, even though Sri Lanka had previously obtained loans from international lending organizations and nations at interest rates of 1% or less.

According to reports, Sri Lanka took out loans with high interest rates as a result of the exorbitant commissions Chinese corporations paid to select parties to finalise the transactions. It has been determined that China's motivation for providing loans for large-scale projects is an effort to keep Sri Lanka in a cycle of debt in order to use Sri Lanka as a battleground in its drive to become a worldwide superpower. Unsurprisingly, China has taken advantage of this chance to once again plunder Sri Lanka's resources.

The partnership between China and Sri Lanka has deteriorated during the past twenty years. This shift can be attributed to China's launch of the global "One Belt, One Road" initiative, which was intended to strengthen its foreign policy and economic strategy. Unfortunately, this development has caused the two nations' ties to deteriorate.

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