Hyrax Inks Sri Lanka Deal

Hyrax Oil, of Malaysia, will construct a blending plant in Sri Lanka to supply lubricants for national oil company Ceylon Petroleum Corp. as part of a 20-year deal signed by the companies this month.

The deal includes a build, operate and transfer agreement along with a 20-year supply contract and a land lease, a Hyrax official confirmed, declining further comment. Neither CPC nor Sri Lankas Ministry of Petroleum Resources Development could be reached for comment by deadline.

According to Malaysias state-owned news agency, Bernama, the 42,000 metric tons per year plant will be built with an investment of U.S. $30 million on a 2.2 hectare site in Muthurajawela, just north of Colombo.

In May 2014, the ministry approved the two companies proposal to establish a $9 million blending plant. CPC was not permitted to manufacture lubricants in Sri Lanka at the time, and it wasnt until this March that the government granted CPC a license to do so, seeding the company $13 million for the new business.

The national oil and gas company was the countrys sole manufacturer and supplier of lubricants until it sold that part of its business to Caltexs Lanka Lubricants Ltd. (now Chevron Lanka), in 1994.

Since then, the country has placed limits on its lubes market. Until March, only two companies - Chevron Lanka and Indian Oil Corp.s Lanka IOC - held blending licenses. Today, only 13 outfits are permitted to sell lubricants - a list that includes CPC, which has been marketing Hyrax products under the Hyrax-Ceypetco brand for some time. The brand held the second-largest share of the countrys market - or around 11 percent - last year, according to the ministrys 2015 progress report.

The lubricants and special products function of CPC, though not making a big contribution in terms of its annual income, has managed to maintain its market share, the reported noted. With a product range of about 36 items, it has contributed to retain Ceypetcos identity in the local market. It has become a profitable business for CPC.

Kuala Lampur-based Hyrax Oil Sdn. produces transformer oil, motor oil and other specialty lubricants, exporting to about 40 countries in the Asia-Pacific region, Africa and the Middle East. In Mozambique, it is jointly incorporated with state-owned Petroleos de Mocambique, or Petromoc.