Sinopec's $4.5-B refinery in Sri Lanka to challenge India's fuel export market share

In a strategic shift, Sinopec, the global oil giant, is pursuing entry into Sri Lanka's market by proposing its inaugural overseas refinery at the Chinese-managed Hambantota port. This $4.5 B investment, approved by Colombo in November, underscores Sinopec's ambition to offset declining growth in China's oil demand. The move also heightens competition with India, which aims to bolster its energy footprint in Sri Lanka through alternative ventures, including a proposed fuel products pipeline.

Sinopec's pivot towards a refinery geared more towards domestic needs, contrary to Sri Lanka's export-oriented preference, intensifies the rivalry with India. Despite India's significant fuel supply role in Sri Lanka, Sinopec's initiative signals a strategic contest for market dominance.

Driven by a newly launched investment arm, Sinopec is prioritizing global expansion, with Sri Lanka and Saudi Arabia as focal points. As China's oil demand approaches saturation amid economic deceleration and rising electric vehicle adoption, Sinopec seeks to leverage its expertise and financial strength in overseas ventures.

This endeavor represents a departure from previous trends in Chinese oil investments abroad, which dwindled post-2015 due to oil price fluctuations and heightened financial scrutiny by Beijing. Sinopec's meticulous planning includes finalizing plant specifications and negotiating market access terms with Colombo, critical factors influencing its investment decision.

Sinopec's foray into Sri Lanka's energy landscape underscores the evolving dynamics of global oil investments, as major players adapt to shifting market realities and geopolitical rivalries.