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Sri Lanka banks wary of dealing with Iran despite US waiver: report
10 Dec, 2012 07:11:55
Dec 10, 2012 (LBO) - Sri Lanka is unable to import crude oil from Iran despite a sanctions waiver by the United States, because banks are wary of opening letters of credit fearing blacklisting, a media report said.
Sri Lanka's The Sunday Times newspaper said state-run Ceylon Petroleum Corporatio, which used to buy Iranian light crude had not imported oil from Iran since June as banks feared opening letters of credit and insurers refused to provide cover.

The reported quoted Ceylon Petroleum Corporation managing director Susantha Silva as saying that he had requested US diplomats to facilitate the transactions by giving an assurance that banks and insurance firms will not be penalized.

On Friday, US had waivers to major Asian petroleum consumers for reducing their imports of Iranian oil and Sri Lanka was among twenty countries permitted to buy Iranian crude in limited quantities.

Sri Lanka used to import about 12 shipments of Iranian crude a year, it 2011 it was cut to 09.

State-run People's Bank and Bank of Ceylon feared opening letters of credit despite the waiver.

"It is understandable from their perspective because Sri Lanka’s economy would come to a standstill if they were blacklisted," the newspaper quoted de Silva as saying.

"This year we were allowed to import ten shipments in the six months since June but we couldn't."

Sri Lanka's only refinery operated by CPC is geared to run of low sulfur Iranian light. Other crudes yielded lower volumes of refined distillates at the refinery. Sri Lanka had been using Omani and Saudi Arabian crudes.

Crudes with higher sulfur content had also reduced the lifespan of refinery parts adding to the cost, the report said.

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