Jan 23, 2012 (LBO) – Sri Lanka will be able to import crude from Iran for at least six months before US sanctions make it impossible for payments to be made to that country, a media report said. Sri Lanka’s The Sunday Times newspaper quoted petroleum minister Susil Premajayantha as saying that talks would be held with Oman soon on oil imports after the US had informed the foreign ministry that there was a six month window before sanctions came into effect.
Earlier reports said Sri Lanka would also attempt to seek a waiver from the sanctions.
Sri Lanka’s state-run Ceylon Petroleum Corporation has long used Iranian light crude for its refinery, which produces a major share of the firm’s retailed products. The balance is imported.
The ageing refinery produces a lower proportion of light distillates, compared to more modern ones and higher proportions of heavier fuels like furnace oil which are cheaper.
Its ‘profitability’ is boosted by import tax protection resulting in billions of rupees of lost taxes to the state.
When the price gap between crude and refined products narrows (crack margin) during some parts of the year, the refinery makes very large losses, and officials