* Deals done with U.S. understanding - Sri Lanka govt
* U.S. denies any such agreement
* Some Iranian crude supplied via Malaysia - Sri Lanka govt
* Sri Lanka's sole refinery is configured for Iran light
(Adds U.S. Embassy, Sri Lanka ministry comments, updates
By Ranga Sirilal and Shihar Aneez
COLOMBO, June 20 The United States denied on
Friday that it had any agreement with Sri Lanka to allow Colombo
to import Iranian crude oil through third parties, avoiding
Western sanctions aimed at curbing Iran's nuclear programme.
"We categorically deny there was any agreement," a spokesman
at the U.S. Embassy in Colombo told Reuters.
Sri Lanka's Media Minister and government spokesman Keheliya
Rambukwella told reporters late on Thursday that the island
nation has been buying Iranian crude from various countries via
third parties, and avoiding sanctions - with the understanding
of the United States.
"For instance, Malaysia supplied what happened to be Iranian
oil. It's a very closed secret," Rambukwella said during a
briefing on the expansion of Sri Lanka's shipping fleet. "But we
have had some understanding with the U.S. as well."
"I know the gravity of it. I know it's a serious statement,"
he said when asked if he was aware of the possible implications
of what he was saying. He did not elaborate on the nature of the
understanding between Sri Lanka and the U.S. government.
"Iran was supplying to 'X' place under a different name and
from there to other places. Wherever there are sanctions, third
parties are involved," Rambukwella added.
Asked how many cargoes of Iranian crude Sri Lanka had
obtained through third parties, Rambukwella said, "I have no
idea, but it was time to time. At the end of the day, you get
the oil, and our refinery is meant for Iranian crude. They have
a sulphur problem and other issues."
In a statement, Sri Lanka's External Affairs Ministry
"categorically" rejected the contents of a Reuters article
reporting Rambukwella's comments on Sri Lanka evading U.S.
sanctions against Iran, saying it was "wholly incorrect and
devoid of any truth."
A spokesman for Malaysian state oil firm Petronas
declined to comment. A Petronas source, who didn't want to be
named because of the sensitivity of the issue, said the company
had been told by the Prime Minister's office not to deal in any
business related to Iran. Malaysia stopped buying Iranian oil
when Western sanctions were put in place in early 2012.
Sri Lanka's only oil refinery - a decades-old, 50,000
barrels-per-day (bpd) plant run by Ceylon Petroleum Corp
(Ceypetco) - is configured to run on Iranian crude. The
Sapugaskanda refinery, near Colombo, has faced closure at times
as it scrambled to fill shortfalls due to sanctions on Iranian
Sri Lanka has previously said that Western sanctions against
Iran punish countries that depend on Iranian oil, but Colombo
has sharply reduced its imports of Iranian crude to be eligible
for waivers - concessions offered by Washington to avoid an
energy crunch as a result of the sanctions.
Sri Lanka was twice granted waivers after the U.S. sanctions
came into effect. It received a first waiver in June 2012 after
cutting imports of Iranian crude by 23 percent.
But Sri Lanka was unable to buy any Iranian crude in the
second half of 2012, largely because sanctions imposed on Iran
by the European Union made it difficult to secure ships or
insurance. With imports from Iran falling to zero in that
period, government officials said they had been told by
Washington that Sri Lanka would no longer be eligible to import
from Iran. In June of last year, Sri Lanka's oil minister said
it was unlikely the country would be granted another waiver.
Last November, the Sri Lankan government cancelled a
shipment of crude after it was suspected of containing banned
Sri Lanka has been importing Oman light and Murban crude
from Abu Dhabi, but Ceypetco officials have said the yield at
the refinery from processing these alternative crudes has been
15-20 percent lower than that from Iran light.
In exchange for a limited easing of sanctions, Iran agreed
last November to take action to eliminate its most
proliferation-prone enriched uranium gas stockpile and stop
producing the material.
(Additional reporting by Florence Tan in SINGAPORE; Editing by
Jane Baird and Ian Geoghegan)