Accord Group and Oman secure $3.85bn deal to build oil refinery

Indian firm Accord Group has reached a $3.85bn agreement with Oman’s Ministry of Oil and Gas to build a 200,000bpd oil refinery in Sri Lanka under a joint venture (JV).

The deal represents the biggest single foreign direct investment commitment ever made in the island nation, Reuters reported.

Citing Sri Lankan officials, the news agency stated that the proposed refinery will be constructed on a parcel of land near the site of the new Hambantota international port and a related industrial zone on the country’s southern coast.

Under the agreement, Accord Group will be a majority owner in the JV with a 70% interest. Oman’s Ministry of Oil and Gas will own the remaining 30% stake.

The partners are expected to commence the construction of the refinery later this month and complete the project in 44 months.

The facility will have the capacity to produce nine million metric tonnes of refined products a year for export from the Hambantota port.

Accord is primarily involved in power generation, brewing and healthcare. The refinery in Sri Lanka will mark the company’s debut in the oil refining business.

According to the project document accessed by Reuters, the JV plans to invest $1.89bn in share capital and a further $1.96bn via loans.

Sri Lanka’s development strategies and international trade deputy minister Nalin Bandara Jayamaha noted that the refinery project will enable the country to grow its exports by $7bn a year.

Citing Sri Lanka’s development strategies ministry adviser Mangala Yapa, the news agency reported that 200 acres to build oil tanks for the refinery were available.

The government and the JV partners are in the process of acquiring the remaining 385 acres for the project.

An environmental impact assessment for the project is currently underway.