The proposed $3.7 billion Sinopec oil refinery project in Sri Lanka’s Hambantota Port is facing significant delays due to unresolved issues related to equity structure, tax concessions, market access, and land allocation.
The Hambantota Port, leased to China for 99 years after Sri Lanka failed to repay its debt, is a key site for the refinery’s proposed development.
During President Anura Kumara Dissanayake’s visit to Beijing in January 2025, Sinopec agreed to build a major refinery with a processing capacity of 200,000 barrels of crude oil per day.
The deal marks a substantial increase from the original plan for 100,000 barrels per day and has raised concerns over Sri Lanka’s sovereignty and economic autonomy.
Despite Sinopec’s push for a greater equity share and access to the domestic market, Sri Lankan authorities have so far refused to revise the initial terms outlined in the Request for Proposal.
The Ceylon Petroleum Corporation has warned that allowing unrestricted market access for Sinopec could destabilize Sri Lanka’s petroleum sector and threaten energy security.
Although 500 acres of land in Arabokka were initially allocated for the refinery, Sinopec has requested an additional 200 acres near the Chinese-controlled port.
A final decision on the land allocation and lease terms is still pending, preventing formalization of the project agreement.
The Central Environment Authority has instructed Sinopec to conduct an environmental impact assessment and submit a report before proceeding.
While the project is considered a top priority for Sinopec, local opposition and regulatory hurdles continue to stall progress.
