Oil Supply

Aug 19, 2010 (LBO) – Sri Lanka is to extend a deal with Iran to buy two million metric tonnes of crude oil a year with a 120-day interest free credit facility, a government spokesman said. Media minister Keheliya Rambukkwelle said Sri Lanka buys most of its crude oil from Iran and the government’s agreement with the National Iranian Oil Company which amounts to supplying 40,000 barrels a day expires on August 31, 2010.

“The Cabinet of ministers approved a proposal by the petroleum ministry seeking to extend the agreement by one year,” he told a news conference.

The deal was struck during a visit to Iran by Sri Lankan president Mahinda Rajapaksa in 2007 when Iran agreed to a request by the island to extend its usual 30-day interest free credit facility to 120 days.

Rambukkwelle said the agreement is to be extended by one year on the same credit terms which he said were advantageous to the country.

A shortfall of 135,000 MT of crude needed by the island would be bought from Saudi Arabia with a 30-day interest free credit facility.