Cyril Barabaltchouk Courtesy United 24

Sri Lanka is negotiating to purchase crude and refined fuels from Russia and China, according to the country’s Energy Minister Anura Karunathilake, cited by Reuters on May 25.

Reuters wrote that the import-dependent nation seeks to address fuel shortages linked to the global energy crisis.

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The country, which relies entirely on imported fuel, has been affected by energy market disruptions stemming from the war in Iran. According to Reuters, authorities have implemented a 40% increase in fuel prices, rationed sales, and designated Wednesdays as public holidays to reduce consumption.

Karunathilake stated that discussions with Moscow and Beijing over the past two months have been positive.” However, the government is currently negotiating prices for potential Chinese fuel supplies and working to resolve payment methods for Russian imports.

We have not agreed fully on what would be the payment method. In principle, we don’t have any problem in paying in any currency, but what would be the practical method? That’s the case,” the energy minister told Reuters, declining to provide a timeline for the imports.

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Sri Lanka plans to utilize a temporary US sanctions waiver valid until June 17 to facilitate the Russian imports. The primary objective is to secure Russian crude to operate the country’s sole refinery, though Colombo is also considering refined products from both countries.

The minister told Reuters that the initial plan is to procure one shipment from each country before evaluating further imports. Currently, most of Sri Lanka’s fuel is sourced from Singapore and India, with crude arriving from the United Arab Emirates. Tender-based shipments are secured through August.

The increased energy costs are affecting the national economy. Power tariffs were raised by 18% earlier this month to align with a $2.9 billion International Monetary Fund (IMF) program that supported the country’s recovery from a financial crisis four years ago.

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Higher fuel bills have also impacted the local currency. According to Reuters, the Sri Lankan rupee has depreciated by approximately 8.7% since early March, trading at 336 against the dollar on May 25.

Sri Lanka’s struggles spotlight a regional trend of Asian nations encountering roadblocks when attempting to secure Russian energy. Following a meeting between Indonesian President Prabowo Subianto and Russian leader Vladimir Putin, Jakarta had recently announced an ambitious plan to import 150 million barrels of Russian crude this year.

However, the initiative is already stalling. It was reported that Indonesian state energy firm Pertamina was struggling to develop a regulatory framework that avoids violating the terms of its global bonds due to Western sanctions.

Furthermore, oil traders had warned that a critical shortage of available tankers and the logistical difficulty of diverting such massive volumes make the deliveries highly complex. According to shipping data, only a single Russian cargo has successfully reached the Southeast Asian nation so far.