U.S. exempts Sri Lanka from Iran oil sanctions

Jun 12, Washington, DC: The United States State Department will exempt Sri Lanka along with six other countries from financial sanctions after they have agreed to reduce their imports of Iranian oil, the White House has announced Monday.

Along with Sri Lanka the U.S. has exempted India, Malaysia, South Korea, South Africa, Taiwan and Turkey for six months.

In a statement issued Monday, Secretary of State Hilary Rodham Clinton said the seven economies have all significantly reduced their volume of crude oil purchases from Iran.

As a result, sanctions for Fiscal Year 2012 will not apply to the financial institutions of those countries for a potentially renewable period of 180 days, the statement said.

The U.S. actions on Iran oil are to take effect on June 28 and without the exemptions banks of those countries will face the threat of being cut off from doing business with the US financial system.

The U. S. Exempted Japan from the sanctions along with some European countries in March but China, a major oil importer from Iran is not exempted yet although China has cut down one-fifth of its oil imports from Iran.

Sri Lanka depends almost entirely on Iran for its crude oil supplies and the country's only refinery at Sapugaskanda that processes 50,000 barrels per day can only process Iranian crude.

However, as the deadline for the sanctions to take effect is approaching, Sri Lanka has sought other sources for its oil requirements.

Sri Lanka's Ceylon Petroleum Corporation (CPC) in April signed a memorandum of understanding with Oman Oil Co (OOC) to purchase oil from Oman. Sri Lanka is also considering to purchase fuel from Saudi Arabia and Vietnam as well.

The government has also reached an agreement with Qatar to purchase refinery oil necessary for the Sapugaskanda Oil Refinery and refined fuel products.