The government is facing a diplomatic dilemma over fuel imports after Iran said it could meet the country’s requirements despite a US embargo and the External Affairs Ministry veering to seek an exemption from Washington.
Iran this week informed Sri Lanka through diplomatic channels that it could continue to meet the country’s requirements and assured that payment arrangements could be worked out. This is much the same way Tehran proposes to discuss new payment agreements with India after New Delhi said it would not heed the US embargo. An Indian delegation is expected to visit Tehran ahead of the imposition of the embargo for this purpose.
U.S. President Barack Obama on December 31 signed a law that will ban from the U.S. financial system any financial institution that pays for Iranian crude oil after a six-month deadline passes.
External Affairs Ministry sources said yesterday that Minister G.L. Peiris has informally approached the United States Embassy in Colombo to determine how Sri Lanka could seek an exemption.
The United States embassy’s Media Director Chris Teal told the Sunday Times the matter would be discussed when Luke Bronin, Deputy Assistant Secretary in the US Treasury arrives in Sri Lanka on February 2. Mr. Bronin is responsible for matters relating to Terrorist Financing and Financial Crimes.
Mr. Teal said he would meet Sri Lankan officials “to gather information about financial institutions in Sri Lanka to better understand how the upcoming Iran sanctions legislation will affect the Sri Lankan financial system, as well as to discuss the legislation and its implementation.”
Eighty per cent of Sri Lanka’s requirements of crude oil comes from Iran and is said to be the quality most suited for the oil refinery at Sapugaskande. The balance is imported from Saudi Arabia. The Saudi government has said that it will not be able to meet additional requirements sought by Sri Lanka in view of increasing demands. The move forced Sri Lanka to turn to Oman though the quality of crude does not contain bitumen when refined. At a price of around US $ 100, Sri Lanka pays a billion dollars to Iran every year for its crude oil requirements.
China is another country which has said it would not heed the US embargo and would continue to purchase its crude oil requirements from Iran.
Petroleum Resources Minister Susil Premajayantha told the Sunday Times that in view of the impending US sanctions, Sri Lanka was already looking at alternative sources. He said discussions with Oman had begun.
“Within three weeks, Sri Lanka officials will be visiting Oman to further discuss issues. It will follow another visit to Colombo by an Omani delegation. We will also consider Omani assistance to improve our refinery,” he said.
Sri Lanka currently enjoys a four month credit facility from Iran for oil purchases. |
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