Sri Lanka struggles with 20% Iran oil cut

Tuesday, 23 October 2012 00:41 - - {{hitsCtrl.values.hits}}

DUBAI (Reuters): Sri Lanka has reduced its Iranian crude imports by 20 per cent this year but disagrees with Western sanctions that are punishing countries that depend on its oil, Foreign Minister G.L. Peiris said on Monday.

Like other Asian oil importers, Sri Lanka has been trying to adjust to sanctions that the United States and other western countries have imposed on Iran’s oil sector over the Islamic republic’s disputed nuclear program.

As a result, exports from Iran, have fallen sharply as consumers struggle to pay for the oil and to secure insurance cover for tankers to ship the crude.

“There has been a reduction on the quantities imported into the country from Iran of about 20 percent this year,” Peiris told Reuters on the sidelines of an energy conference in Dubai, adding that Sri Lanka objects to having to make the cuts.

“It’s not something we like or approve of, it’s a situation that has been brought about... we feel like (importing) countries suffer because the sanctions are targeted in a particular way,” he said.

He said the shortfall was being met with additional imports from Saudi Arabia and Oman.

But Ceylon Petroleum Corp (Ceypetco) said on Monday it may be forced to shut Sri Lanka’s sole 50,000 barrels-per-day oil refinery from Thursday for up to two weeks if efforts to secure alternative supplies to Iranian crude fail. The refinery is configured to run solely on Iranian crude.

Sri Lanka is now in talks with Iran to find suitable payment method for its crude, as banks dealing with Iran have also been targeted by Western sanctions. Iran has not offered discounts on its crude, he said.

US Secretary of State Hillary Clinton said in June that the US would exempt Sri Lanka, along with other nations, because they have significantly cut down on their imports.