Talks on oil purchases from Oman proceeding successfully

Disna MUDALIGE

The government’s discussions with Oman to purchase crude oil, in the wake of economic sanctions on Iran, including oil related transactions to which a deadline is set for June 28, are continuing successfully, Petroleum Industries Ministry Secretary Dr R S H Samaratunga said.

He said experts in the field have proposed that Oman mixed crude oil is more likely to match the capacity of the Sapugaskanda oil refinery.

He said a sample of Oman mixed crude oil is to be received this week for a laboratory test to check its compatibility with the technology in the refinery. Dr Samaratunga told the Daily News yesterday that the Ceylon Petroleum Corporation (CPC) signed a Memorandum of Understanding (MoU) with Oman Oil Company (OOC) last month following Cabinet approval to start oil agreements. Denying rumours that there would be a revision of oil prices in the local market after the New Year, he said the government has no plans to increase fuel prices in the near future.

Dr Samaratunga said even though the supply of crude oil is under a crisis, the supply of refined oil to suit the country’s energy requirement could be met without a shortage.

He said an agreement was also reached with Vietnam to purchase diesel for six months starting from April 1. This agreement was an outcome of President Mahinda Rajapaksa’s recent visit to Vietnam.

He said petrol and aircraft fuel could be purchased from Oman with the conclusion of discussions.

Dr Samaratunga said Sri Lanka is highly vulnerable to US oil sanctions on Iran since, Iran caters to 93 percent of the country’s crude oil requirement.

“No other depends so much on Iranian crude oil. Our volume of crude oil importation is small compared to other countries, but it is greater considering the country’s oil consumption. We import about 14 ships of crude oil annually and among them almost 13 are from Iran and one is from Saudi Arabia,” he said.

Dr Samaratunga said this has happened due to the limited capacity of Sapugaskanda refinery. He noted the government is looking forward for investments to upgrade the refinery system which would need large scale investments.

“From June 29, no country can deal with Iran using USD. If it is done the US has warned that they would cut off the relations with that particular country. It will definitely affect the international trade of any country including Sri Lanka,” Dr Samaratunga said.

He said Iran is the world’s third largest oil producer with Russia and Saudi Arabia in the first two positions. Iran’s oil supply caters to 12 percent of the world’s oil demand.