News
Lanka seeks oil from Russia; but only two companies acknowledge request
Just two out of six Russian companies have responded to a call from Sri Lanka for oil and that, too, was only to acknowledge the request letters sent to them by the Ceylon Petroleum Corporation (CPC), Power and Energy Minister Kanchana Wijesekera revealed.
Two out of six companies suggested by Russia’s Ambassador to Sri Lanka “have written back to us saying they have received our requirements and will get back to us,” the Minister said, in response to a question the Sunday Times raised during a Twitter Space organised by Parliament. If any company offers to supply oil at a rate acceptable to Sri Lanka, it could be further negotiated.
However, any oil procurement from Russia will not be through a tender process, Mr Wijesekera also said. Sri Lanka would have to enter into long-term contracts with the supplier, subject to Cabinet approval. “But until now, there are no Russian companies which had given us any supplies,” he said.
International media recently reported Sri Lanka took delivery of a consignment of Russian oil (crude) to restart the Sapugaskanda refinery. The Minister was quoted as saying the shipment had waited offshore for more than a month while money was being raised to pay for it. He clarified this week that, “The last shipment of crude was not from a Russian company. It was actually not an unsolicited proposal. It was a bid by one Dubai-based company, Coral Energy. They were the only bidders on the crude oil so there was no option for us but to pick that.”
Bloomberg Media reported that the vessel, Nissos Delos, carrying a cargo of Siberian Light, was loaded at the Black Sea port of Novorossiysk on March 29 and was chartered by a trader named Coral Energy.
Sri Lanka has requested support, not only from Russia, but from all oil-producing countries. During discussions with the Russian ambassador, Minister Wijesekera was told the Russian Government did not get involved in the oil business and that its oil companies were not Government-affiliated. There are, however, private companies “known to the Government”. And six names were suggested by the ambassador with the advice to make supply requests to them directly.
“In Sri Lanka, what we have is a tender system,” the Minister said, adding that, “The drawback of the tender system also comes into play in CPC (Ceylon Petroleum Corporation) tenders for fuel supplies. Unfortunately, not many bid on the tenders.”
The Russian ambassador told him “none of the Russian companies will bid on any tenders”. “That’s not how the Russian companies work,” the Minister said. “If you want to go into agreement with them, you directly speak to them. So the CPC has already done that. The CPC has sent out a request letter.”
The Reuters news agency reported in March that Russian oil market participants now favour private deals over public offerings due to Western sanctions. While a quarter of Russian oil exports were usually sold on a spot basis–usually via public tenders in which a number of companies were generally invited–Russian oil companies haven’t stopped issuing spot tenders for the ESPO Blend or Urals (which are oil grades).
“Spot tenders had been a perfect instrument to place spot barrels, and the results of the tenders were used by the market as a price reference,” Reuters stated. “Since the end of February, however, tenders have been shunned by buyers spooked by sanctions imposed on Russia by Western nations targeting Russia over its invasion of Ukraine.”
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