Thursday, November 1, 2012
Sri Lanka eyes new crude pacts after Iran curbs hit supply
COLOMBO |
Oct 31 (Reuters) - Sri Lanka plans to invite tenders for term supply contracts as the island nation hunts for alternatives to imports of Iranian crude curbed by U.S. sanctions, the country's petroleum industries minister said on Wednesday.
Exports from Iran, which is grappling with tough Western sanctions targeting its energy and petrochemical sectors, have fallen sharply as consumers struggle both to pay for the oil and to secure insurance cover for tankers to ship the crude.
Sri Lanka's sole 50,000 barrels-per-day oil (bpd) refinery, configured to run on Iranian crude, has been scrambling to fill a shortfall after it was unable to bring in Iranian crude, but had to shut for two weeks from Oct. 26 after supplies ran out.
"We will call tenders to award some term contracts by January as we are unable to get the crude from Iran," Susil Premajayantha told Reuters by telephone.
Although Sri Lanka was in talks with Iran and was ready to buy its oil, sanctions prevented the Middle Eastern nation from supplying crude, he added.
"So we will call tenders to award term contracts from other crude suppliers as we need to operate the refinery."
Premajayantha said he hoped the Sri Lankan refinery would restart by Nov. 10 as the next consignment of crude oil was expected by Nov. 8. "We have time till January, as we have lined up (supplies) till January," he said.
The sanctions have so far compelled the $59-billion Indian Ocean economy to spend an extra $1.2 billion on oil imports, Premajayantha told parliament last week.
Sri Lanka has reduced imports of Iranian crude by a fifth this year, but disagrees with Western sanctions that are punishing countries that depend on the oil, Foreign Minister G.L. Peiris said last week.
State-owned Ceylon Petroleum Corporation (Ceypetco) expects crude consignments from Dubai on Nov. 8 or 9 and another from Saudi Arabia on Nov. 13, General Manager Susantha Silva said last week. A third is scheduled from Abu Dhabi in December.
Ceypetco has been having problems running the refinery at full capacity as alternative crudes, such as Arabian light, are not able to produce the necessary yield.
The sanctions have so far led to the failure of three attempts by Sri Lanka to obtain Iranian crude as the company struggles with getting shipping insurance and payment on the Iranian oil, Silva has said. (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Clarence Fernandez)
