Persian Prop

May 24, 2010 (LBO) – Iran may provide Sri Lanka a loan of 1.5 billion US dollars to double the capacity of the island’s sole oil refinery to 100,000 barrels a day, a media report said. The earlier understanding was for us to come up with 30 percent, but Iran may come in to completely finance the expansion, petroleum minister Susil Premajayantha was quoted as saying by Bloomberg newswires in an interview.

Construction work on the project, which will take two years, is to start in early 2011, he said.

The project has already been delayed by several years with the cash-strapped government short of money to fund its part of the contribution.

Premajayantha also told Bloomberg that another refinery is to be built by a Chinese firm in southern Hambantota, where a Chinese consortium is building a deep-water port funded with a loan from China.

He was quoted as saying China Huanqiu Contracting and Engineering Corp. has given a proposal to set up a refinery in Hambantota that would export products.

The Hambantota port lies close to the main East-West shipping route across the Indian Ocean.

Premajayantha also said that preliminary seismic tests by Cairn India