Oil imports: US gives concessions to Lanka

No total ban on supplies from Iran, only 15% reduction says Petroleum Minister

Hard on the heels of the US sponsored resolution at the UN Human Rights Council in Geneva this week, Sri Lanka has gained a concession from the US on restrictions imposed on fuel imports from Iran.

United States, which imposed sanctions on Iran, has asked Sri Lanka to scale down crude oil imports from Iran for the current year only by 15 per cent, a senior Minister said yesterday.

Petroleum Industries Minister, Susil Premajayantha said such a reduction meant Sri Lanka would not face a total ban immediately. Earlier, a total ban was expected to come into force from June this year fuelling fears that the country may face a serious fuel crisis.

“The concession to reduce crude oil imports only by 15 per cent was a result of the appeal made to the US earlier,” Minister Premajayantha said. Sri Lanka imports as much as 93 per cent of its annual crude oil requirements from Iran.

A spokesman for the US embassy in Colombo said, “The US is in active discussions with the Government of Sri Lanka about the plans to reduce imports of Iranian crude oil,” but did not elaborate on the concession reported to be given.

Mr. Premajayantha said the government was now looking for other sources to obtain the balance 15 per cent of supplies. Talks were underway with Saudi Arabia and Oman for this purpose.

This week the Oman Oil Company (OOC) and the Ceylon Petroleum Corporation (CPC) signed a memorandum of understanding in energy related activities during a visit to Colombo by an Omani delegation. The delegation also met Minister of Economic Development Basil Rajapaksa and Treasury Secretary P.B. Jayasundara, Minister Premajayantha said.

This will be followed by a top level technical delegation from Sri Lanka visiting Oman next week to look at the feasibility of importing crude oil, the quantities as well as to work out other modalities before entering into any buying agreement, he said.

“We have only signed an MoU with Oman. The government is also exploring the possibility of reducing the supply from Iran and to increase the supply from Saudi Arabia and Oman,” he added. Meanwhile the CPC has also entered into another agreement with Vietnam’s Viet Petrol Co. Ltd to buy refined petroleum from that country.

War-torn Iraq also has offered to supply fuel to Sri Lanka. Dr. Jayasundera told journalists in Colombo on Thursday, during a rare briefing, that the oil import bill had risen to US$ 4to 5 billion from US$ 2 to 3 billion and the recent domestic fuel price increase was aimed at removing long standing structural distortions. "With the adjusted prices the losses of the CPC have been brought down to around Rs.60 billion from Rs. 200 billion,” he noted.

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