The Sundaytimes Sri Lanka

Sri Lanka seeks alternative payment mode for Iran oil


Sri Lanka is seeking alternative ways to make payment for its crude oil imports from Iran after receiving a 180-day waver this month from strict US sanctions in return for significantly reducing Iranian oil purchases, Sri Lanka’s oil minister said.
The 180-day waver, set to run till the end of the year, could be extended after reviewing the country’s adherence to further reduce Iran oil imports.

The Central Bank is working out a mechanism to continue financial transactions with Iran, through a foreign bank or the use of a non-US financial institution with the consent of US, Minister of Petroleum Resources and Development Susil Premajayantha told the Business Times.

Under a US law signed in December last year , President Barack Obama is allowed, after June 28 this year, to sanction foreign banks that carry out oil-related transactions with Iran’s central bank and effectively cut them off from the U.S. financial system.
The minister quoted US authorities as saying that Sri Lanka met the requirements for the country to be exempted from sanctions under the national Defence Authorization Act of 2012, based on the country’s action to reduce Iran oil imports significantly.
As a result sanctions will not apply for 180 days starting June 11 2012 with respect to financial institutions over which Sri Lanka has primary jurisdiction, he said.

Central Bank officials are conducting talks with US officials to work out a financial transaction mechanism to import crude oil from Iran as it is more suitable for the country’s oil refinery.� However he disclosed that Sri Lanka has taken measures to reduce Iranian purchases to 10 cargoes per year from 13.� One cargo is equivalent to 130,000 metric tons, he said.

Meanwhile Sri Lanka’s Sapugaskanda oil refinery which processes 50,000 barrels per day of crude will be closed for normal maintenance in July and reopen in August to process Iranian, Saudi and Oman crude, he revealed.

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