CPC gives fuel oil tender to sanctions-hit Iranian supplier
Monday, 5 May 2014 00:17
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The petroleum industry was buzzing with the development of CPC awarding the latest fuel oil tender for the supply of 35,000 tons to Iranian oil trading firm Horizon.
The move was despite warnings that the consignment may include US sanctioned product, prompting industry analysts to warn of possible consequences for Sri Lanka’s failure to comply with US-led Western sanctions against Iran.
The tender was for the supply of 35,000 tons of low sulphur fuel oil.
Analysts questioned what factors were considered for CPC to risk US sanction rules in awarding the contract and whether the country’s petroleum situation was very desperate.
They also questioned whether a political deal has been struck with the US paving way for fresh deal with an Iranian party.
The imposition of sanctions against Iran by the US in 2012 caused CPC to shift away from the purchase of Iranian Light crude oil to other crude oil types from different destinations.
Iranian oil is the main feedstock used by the country’s sole refinery, which has a 50,000 barrel-per-day capacity.
The US has not relaxed sanctions imposed on Iran despite reaching an accord between the P5+1 countries – US, China, Russia, Britain, France and Germany – and Iran in November 2013.
Via talks in January this year the Government has requested an exemption to import Iranian crude to start the now closed oil refinery in Sapugaskanda. Sri Lanka received a six-month waiver in November 2013 for no longer purchasing oil from Iran. A waiver granted by the US State Department means that the banks in the importing country will not be cut off from US financial system for the next six months.
