Ceylon Petroleum Corporation facts for kids

Quick facts for kids
Ceylon Petroleum Corporation

Type	Government-owned corporation
Industry	Oil and gas
Founded	1962; 63 years ago (1962)
Headquarters	CEYPETCO House, 609 Dr Danister De Silva mawatha, Colombo 9 , Sri Lanka
Number of locations	1,302 (2019)
Area served	Sri Lanka
Key people	Mohamed Uvais Mohamed (Chairman)
Products	Petroleum Natural gas Motor fuel Aviation fuel Petrochemical Lubricate
Production output	280,000 bbl/d (2021)
Revenue	Rs 531 billion (2020)
Operating income	Rs 44 billion (2020)
Net income	Rs 1 billion (2020)
Total assets	Rs 349.69 billion (2020)
Total equity	▲ Rs −529 billion (2020)
Owner	Government of Sri Lanka
Number of employees	2,616 (2019)
Parent	Ministry of Petroleum Resources Development
Subsidiaries	Litro Gas

Ceylon Petroleum Corporation, often called CEYPETCO (CPC), is a big oil and gas company in Sri Lanka. It started in 1962 and is fully owned by the Government of Sri Lanka. CEYPETCO is the largest oil company in the country. It was created when the government took over all private oil companies in Sri Lanka. The company is based in Colombo and is managed by the Ministry of Petroleum Resources Development. It is one of the largest government-owned companies in Sri Lanka.

CEYPETCO is very important for Sri Lanka's government. About 30% of the government's budget depends on the money CEYPETCO provides. However, the company has faced financial challenges. For example, in 2018, it had a record loss of Rs. 326 billion.

How CEYPETCO Started

Even after Sri Lanka became independent in 1948, the way the country handled its oil and gas industry stayed the same for a while. This changed in the late 1950s. The Ceylon Petroleum Corporation was officially created on May 29, 1961, through a special law.

Later laws in 1962, 1963, and 1964 allowed the government to take over the properties of big oil companies like Shell, Esso, and Caltex in Sri Lanka. This gave CEYPETCO the only right to bring in, sell, send out, or share most oil products in the country.

In 1961, Prime Minister Sirimavo Bandaranaike made a law to help Sri Lanka buy oil from countries like the UAE and the former Soviet Russia. This helped Sri Lanka avoid high prices from other oil groups. After CEYPETCO was set up, Prime Minister Bandaranaike also took over the operations of British and Dutch oil companies.

Growing the Business

In 1968, CEYPETCO built a new oil refinery. This helped them make more oil products, increasing production to 38,000 barrels per day.

From 1969, foreign oil companies could work in Sri Lanka by partnering with the National Iranian Oil Company. The Sapugaskanda Refinery was built by Iran with CEYPETCO's guidance in August 1969. This refinery also started making JET A1 in the late 1980s. It is the biggest oil refinery in Sri Lanka.

In the mid-1970s, CEYPETCO began selling LPG cylinders for homes in Colombo. They also expanded their delivery network to reach more places.

CEYPETCO handles more than half of Sri Lanka's oil products market. It also manages 60% of the country's oil refining. CEYPETCO owns and runs refineries that can process 50,000 barrels of oil each day.

Since the 1970s, CEYPETCO has been the main company for oil in Sri Lanka. This allowed it to expand its work. It started importing crude oil and refined oil, storing it, distributing it, and selling it in stores. CEYPETCO also added many other products to its sales, such as agrochemicals, chemical fertiliser, LPG, Naphtha, and synthetic fiber. The refinery also produced bitumen for building roads. By the late 1970s, selling lubricating oil and fuel for ships became very profitable for CEYPETCO.

Between 1977 and 1994, Sri Lanka's government changed its economic approach. It started to allow more private businesses and international competition. After 1977, private companies were allowed to operate in areas like lubricants and ship fuel. Later, private companies also started importing and distributing LPG. In 1996, Shell bought a part of CEYPETCO's LPG business. However, ten years later, the government bought back most of that share.

In 1978, CEYPETCO also started making Nylon 6 yarn, which is used for textiles, tires, and fishing nets. In 1979, the refinery's capacity increased to 50,000 barrels per day.

On October 20, 1995, there was a serious attack on CEYPETCO's oil storage facilities at Kolonnawa and Orugodawatta. This caused significant damage to the oil tanks and destroyed oil worth over US$10 million.

In 2003, another company, Lanka Indian Oil Company (LIOC), was allowed to enter the oil market. This was done to increase competition. LIOC started importing and selling key oil products like diesel, petrol, and bitumen.

CEYPETCO has also supplied oil to power plants for many years to help generate electricity. Since the 1990s, more electricity has been generated using oil. The Ceylon Electricity Board (CEB) owes CEYPETCO a large amount of money for this oil.

During the recent energy crisis in Sri Lanka, the government decided to allow more companies to sell fuel. Before, CEYPETCO controlled 80% of the market, and Lanka Indian Oil Company controlled the rest. In March 2023, three new companies were allowed to enter Sri Lanka: United Petroleum, Sinopec, and RM Parks (working with Shell).

CEYPETCO's Money Matters

CEYPETCO used to be the company with the highest earnings in Sri Lanka. However, it has recently reported losses. In April 2020, CEYPETCO lost Rs. 45.1 billion in just three months. The company's total debt also grew to Rs. 1,158.7 billion.

The money spent on importing oil in 2021 was US$3.9 billion. This was much higher than the US$1.7 billion spent in 2019. These imports made up about 25% of all money spent on imports in 2021. On November 14, 2021, the Sri Lankan government temporarily closed the Sapugaskanda oil refinery. This was because there were not enough US dollars to buy crude oil. The Sapugaskanda refinery is 51 years old and produces different types of fuel, including kerosene, naphtha, jet fuel, petrol, and diesel. Sri Lanka received a US$1 billion loan from the Central Bank of Qatar to buy fuel and increase its foreign money reserves.

CEYPETCO might have imported less oil in 2021 because there was less demand for jet fuel and fuel oil.