Iran is holding talks on crude export to Sri Lanka upon the looming prospect of an end to sanctions against the Persian Gulf country, Deputy Oil Minister Rokneddin Javadi said on Sunday.
Javadi referred to Sri Lanka as a traditional customer of Iranian crude and said Iran is ready to resume crude supply to the island nation in the Indian Ocean, Mehr News Agency reported.
According to reports, Sri Lanka's crude demand is around 50,000 barrels a day and the country's biggest oil refinery has roughly the same processing capacity.
Iran reportedly supplied 40,000-45000 bpd of oil to Sri Lanka, more than 90% of the country's oil demand, but US-engineered sanctions paved the way for other Persian Gulf producers such as OPEC kingpin Saudi to take Iran's place in the Sri Lankan crude market.
Sri Lanka reportedly had been buying Iranian crude from various countries via third parties not to violate the US and EU sanctions that banned oil and trade deals with the Islamic Republic.
Tehran has invested in Sri Lankan oil refineries to help the country double its oil production capacity. Iran plans to raise crude production by 500,000 barrels a day soon after sanctions are lifted and by 1 million barrels within the following five months.
Javadi said around 60% of the extra output will be supplied to Asian buyers and the rest will go to European markets.
The International Energy Agency speculated in its monthly report last week that oil price competition in Europe will intensify when Iranian crude returns to the market after sanctions.
IEA said Europe will be the battleground between producers of sour crude grades, including Russia, Iraq, Saudi Arabia and Iran, as the Asian market becomes more “crowded”.
Iranian oil officials have reiterated in the past few months that Tehran's "traditional" oil buyers such as China, India and South Korea are ready to sign new deals. Once OPEC's second biggest producer, Iran is keen to regain lost grounds in the global oil market. Sanctions curbed Iran’s sales of crude and condensate to 1.4 million barrels a day in 2014 from 2.6 million in 2011, according to the US Energy Information Administration.
The country is planning to raise crude output to 4.7 million bpd and produce 1 million bpd of condensate by March 2021.
Javadi had earlier predicted that oil prices would hold at $70-80 through 2016.
