Sri Lanka in talks with Oman and Saudi Arabia for oil supplies

Saturday, 4 February 2012 00:00 - - {{hitsCtrl.values.hits}}

By Dinali Goonewardene

Sri Lanka is in talks with Oman and plans to engage in discussion with Saudi Arabia for the supply of oil following US influence to curb imports from Iran, the country’s main supplier accounting for 93% of imports.

The European Union and the US have imposed sanctions on Iran and given other importers six months to look at alternative sources of supply. Yesterday German Chancellor Angela Merkel urged China to use its influence to get Iran give up its nuclear plans at the beginning of a three-day visit, Reuters said.

Ministry of Petroleum Industry officials told the Daily FT yesterday that Oman had agreed to supply requisite quantities should the need arise following a visit by a delegation on 26-27 January and reciprocal delegations will soon be visiting Oman to discuss economic cooperation and oil imports.

Sri Lanka’s oil refinery was built in 1968 by Italian technicians and oil imports have to be compatible. Sri Lanka already imports Saudi Arabian lite crude once a year and will look at sourcing more supplies.

Sri Lanka was top on the list of countries dependent on Iran, sourcing 93% of supply from January to June 2011, followed by Turkey (51%), South Africa (25%), Greece (14%), Italy (13%), Span (13%) and India (11%).

Sri Lanka refines 35,000- 40,000 barrels a day, purchasing 30% of its requirement through spot markets and the balance through forward contracts. Sourcing is through a cabinet supply committee and tender board.

Brent crude rose toward $ 112 a barrel on Thursday, extending gains for a third day on persistent worries over supply from Iran, while upbeat global manufacturing data also boosted appetite for riskier assets.

“We believe the volatile trend will continue in the coming weeks,” SC Securities said in a research note.