With the approval, the Chinese Government-backed refiner will be able to complete project specifics and enter a contract with the government before commencing the construction of the refinery.
The facility, which will focus on exports, will be built at the Hambantota port in the south of the country.
In a post on X, Sri Lanka Minister of Power and Energy Kanchana Wijesekera said: “Cabinet approval was granted today to award the contract to China Petroleum & Chemical Corporation (Sinopec) of China, to enter into an agreement to establish a new Petroleum Refinery & Associated Product Processing centre in Hambantota.”
Sri Lanka is in desperate need of fresh investment and domestic fuel supplies as it works to recover from the worst economic crisis in more than 70 years.
China is the largest bilateral lender to the island nation off the southern coast of India.
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Chinese businesses have developed air and sea ports, roadways and other infrastructure projects in Sri Lanka.
The investment would represent a significant achievement in Sinopec’s long-term strategy to grow outside of China.
The Chinese refining and petrochemicals major also owns assets in Saudi Arabia and Russia.
In September 2023, Sinopec set up a new unit to invest in foreign petrochemical and refining assets.
As the local Chinese oil market gets closer to saturation, Sinopec intends to use its resources and experience to grow abroad through the new unit, Sinopec Overseas Investment Holding.
As per the agreement, QatarEnergy will supply three million tonnes per annum of LNG to Sinopec for 27 years.