Enoc defends the quality of its diesel after Sri Lanka blacklisting

Emirates National Oil Company, the government-owned company producing and selling Dubai's oil, has defended the quality of its diesel after being blacklisted by Sri Lanka over an alleged faulty shipment.

ENOC diesel was blacklisted by Sri Lanka. Sarah Dea/ The National

Emirates National Oil Company (Enoc), the government-owned company producing and selling Dubai's oil, has defended the quality of its diesel after being blacklisted by Sri Lanka over an alleged faulty shipment.

The state-owned Ceylon Petroleum Corporation (Ceypetco) returned a 40,000 tonne cargo of diesel after the product failed to meet the contractually agreed specifications, Sri Lanka's oil minister said on Thursday.

It is the second time that Ceypetco has struck Enoc from its supplier list, having already done so over a 20,000-tonne shipment of substandard diesel in 2011.

The recent cargo passed as good by an independent inspector before it left Dubai, said the minister, Anura Priyadharshana Yapa."But when it arrived, the required specifications were not met. So we returned the cargo and blacklisted the supplier," he said.

In a statement released yesterday, Enoc reiterated that the diesel had been "on spec" when it was inspected in Jebel Ali.

"The gas oil cargo for CPC was loaded and dispatched from Jebel Ali, after the cargo was inspected and verified as conforming to contractual specifications by an independent inspector mutually agreed by Enoc and CPC," said the statement. "A different independent inspector inspected the cargo at the discharge port of Colombo, who reported that one of the parameters was not as per contractual specifications."

The company is investigating why the specifications changed en route to Sri Lanka, and will release a report with its findings, added the statement.

Enoc also countered media reports that it had been withheld a payment for the shipment in 2011, saying it was paid in full, and agreed to pay "nominal monetary compensation" because of the low quality of the cargo. Ceypetco had been aware of quality of the diesel, but agreed to buy the cargo because of a fuel shortage in Sri Lanka, Enoc said.

"The compensation was made on the reiterated basis that Enoc had at all times complied with contractual specifications and without admission of any liability," said the statement.

According to media reports, Ceypetco withheld payment in 2011 after motorists complained about damages to their cars as a result of the low spec diesel.

Ceypetco in 2009 also blacklisted the oil trader Vitol over allegedly low quality diesel, only adding the company to its supplier list again two years later.

Sri Lanka has become increasingly reliant on imports of refined products after the United States and European Union sanctions have restricted the supply of the Iranian crude oil used in the country's only refinery.