Cabinet approval sought to buy UAE crude for Sapugaskanda

The Energy Ministry will submit a cabinet paper next week to seek approval to purchase crude oil from the United Arab Emirates (UAE) for a 200-day credit period to keep the Sapugaskanda refinery running.

The move comes as the Sapugaskanda refinery is due to be shut down for the third consecutive time since December last year due to lack of crude oil.

The ministry over the weekend were preparing technical reports for the purchase of crude oil following a proposal submitted by the UAE to President Gotabaya Rajapaksa and the Energy Ministry.

The Cabinet approval will be sought to obtain crude oil supplies for one year period under which the supplies will be made use to operate the refinery with a capacity of producing 30 percent of the daily requirement of diesel and petrol in addition to Naptha and furnace oil required for power plants.

Energy Minister Gamini Lokuge told the Sunday Times that the offer for a 200-day credit period was made to either purchase refined products or crude oil, but the Government opted to purchase crude oil as it was more beneficial.

Mr Lokuge said the Government hoped to purchase crude oil to the value of US$ 500 million.

He said the technical committee was also studying proposals from Oman, Saudi Arabia and Dubai.

A senior Energy Ministry official said first they would buy 90,000 Mt which would be tested, and based on the result, the ministry would proceed with the rest of purchases.

The official said that one shipment would be expected every month to ensure that the Sapugaskanda refinery could be provided with the required fuel.

CPC sources said a couple of crude oil shipments had materialized and they hoped to get the refinery back on track in April after its closure this week.