New Delhi had made the offer following concerns that Sri Lanka could be crippled if oil supplies were to be disrupted in case of hostilities in the Middle East from where the island imports most of its oil.
"A war in the Middle East is going to have very serious repercussions for us. A lot has to do with oil supplies," Peiris said. "India's gesture to meet all our needs has given us enormous security. This once again demonstrates the strong support of India towards our small country."
The minister said bilateral trade between the two countries was also zooming while the trade gap too had been narrowing over the years. Bilateral trade jumped to $1 billion last year compared to $674 million in 2001.
India's exports to Sri Lanka were worth $831 million, up from $604 million in 2001. Sri Lanka's exports to India went up dramatically to $167.7 million last year, up from $70.8 million in 2001.
Peiris said the trade gap has been slowly narrowing thanks to the Indo-Sri Lanka Free Trade Agreement. He said the trade balance was almost 15 to one in favour of India in 1998, but it had progressively come down to five to one last year in favour of India.
Last year, Sri Lanka allowed India's state-owned Indian Oil Corporaion to set up a petroleum distribution network in the island.
IOC has already announced plans to invest up to $100 million in Sri Lanka to develop oil storage facilities as well as a local pipe networks.