I imagine the oil spray is to allow the paper to resist rot long enough for the seed
to germinate and set roots and therefore be a viable potting vessel. It is therefore also possible to use a more rot resistant paper in the first place, and thus illiminate the need for oil. For example, a toilet paper cardboard tube, (more robust,) cut in half. Or a clingwrap type cardboard tube cut in sections, filled with seed
raising mix and you have the same effect. Then again i may be missing something re the reason for the oil???