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Sri Lanka has rejected an Indian offer to upgrade a local refinery which is built to refine only Iranian oil, a minister said on Sunday. The country's Petroleum Resources Minister, Susil Premjayantha, said that the offer to upgrade the Sapugaskanda oil refinery had come from the Indian Oil Corporation (IOC) which operates most of the fuel sheds in Sri Lanka . He said that Sri Lanka needs to upgrade the facility in order to refine oil from other countries as the import of Iranian oil will be reduced owing to sanctions imposed on Iran by the United States . "We are being compelled to cut our oil imports from Iran because of the U.S. sanctions so we are considering Oman and other countries. But to refine the oil we get from other countries we need to upgrade the facilities at the Sapugaskanda oil refinery because that was built to accommodate only oil from Iran," the minister said. He said that approximately 500 million U.S. dollars will be required to upgrade the facilities at the refinery and Sri Lanka will seek expressions of interest to carry out the work. IOC said last week that it was willing to offer expertise to upgrade the facility but Premjayantha said that Sri Lanka did not accept the offer. He said that with IOC already operating a majority of fuel stations in Sri Lanka and as a result increasing fuel prices at will, handing over the refinery to the same company could hurt the local fuel distribution sector. IOC controls one third of Sri Lanka 's retail fuel market and has been operating in the country since 2003. Sri Lanka is seeking alternative crude oil suppliers in view of the U.S. sanctions on Iran coming into force from June this year. Over 90 percent of Sri Lanka 's crude oil requirements come from Iran.

Sri Lanka rejects Indian offer to upgrade refinery