The Ceylon Petroleum Corporation (CPC) has awarded the $79.52 million contract to build 30 storage tanks and a single point buoy mooring (SPBM) to China's Huanqiu Chemical Engineering Corporation, officials said.

The storage tanks to be completed in three years time, will have a capacity of 250,000 cubic meters, almost as much as the CPC's existing storage of 300,000 cubic meters.

The SPBM, which will be located at Muthurajawela, off the island-nation's northwestern coast, will allow tankers to unload oil supplies without entering Colombo Port. The Chinese company has had previous experience in Sri Lanka having repaired nine tanks at the CPC's main Kolonnawa and Orugodawatte depots, which were blasted by Tamil separatists in October 1995. CPC officials said it was imperative that Sri Lanka increases its oil storage capacity to meet such contingencies. Energy Minister Anuruddha Ratwatte opened talks with the Chinese authorities last month to expand CPC's oil refining capacity in an effort to cut back on expensive imports and develop a local petrochemical industry.

Mr Ratwatte sought Chinese financing for the projects, which are to get off the ground in the next 18 months. After his discussions, the CPC signed a memorandum of understanding last month with China's State Administration for Petroleum and Chemical Industries for two projects, besides the oil tank farm. One of them is a hydro-cracker system to handle more crude oil. The hydro-cracker system is expected to considerably augment the 2.2 million tonnes of crude oil handled annually at present. The CPC's refinery produces some 700,000 tonnes of diesel, about half of the country's annual consumption, forcing it to import refined diesel to meet shortfalls. With the hydro-cracker system in place, the CPC hopes it will not have to import diesel. The diesel demand has been surging because of the greater dependency on thermal power generation and higher demand from the public transport sector.

(India Abroad News Service)