Sri Lanka will likely approve on Monday a proposal from Chinese state refiner Sinopec to build a $4.5-billion-dollar refinery, the South Asian island nation's energy minister said on Saturday.

"It's on the agenda for Monday. Once the cabinet gives approval, we will invite them to sign the agreement," Power and Energy Minister Kanchana Wijesekera told Reuters.

Sri Lanka, trying to recover from its worst economic crisis in more than 70 years, is hungry for new investment and local fuel supplies.

Sinopec's investment of at least $4.5 billion "will go up in value as and when they do additions, but they must first come and sign the agreement for us to give any more details," Wijesekera said.

For Sinopec, the world's top refinery by capacity and one of the largest petrochemical makers, the investment would mark a breakthrough in a long effort to expand beyond China's borders. It owns refinery assets in Saudi Arabia and petrochemicals production in Russia.

The Sri Lanka investment follows state-run China Merchant Port Holdings' 99-year lease at Hambantota port and a $392 million deal to build a logistics and storage hub in Colombo port, Chinese state media reported in April.

That fits into Beijing's ambitious Belt and Road Initiative, billed as recreating the ancient Silk Road to boost global trade infrastructure, experts say.

Sinopec will start basic engineering design, including finalising the size of the refinery and technical configuration, after getting official approval, a senior company official told Reuters this month.

The investment will add to Sinopec's recently started fuel retailing business, the third international company with a foothold in Sri Lanka, with a license to operates 150 petrol stations.

In August Sinopec and commodities trader Vitol were shortlisted by the Sri Lankan government to bid for the refinery. Vitol subsequently dropped out, the Sinopec official said.

The refinery may target markets beyond Sri Lanka, where local fuel consumption is low, and use its partnership with China Merchants Port to expand bunker fuel supply at Hambantota, a deep-sea port near busy shipping lanes between Europe and Asia, analysts say.

Sinopec's fuel oil division, which runs the retail business there, began in 2019 supplying marine bunker fuel at Hambantota, another Sinopec official said.

Sri Lanka's refinery at Sapugaskanda, commissioned in 1969, can process 38,000 barrels of oil a day.