September 26, 2011 5:40 pm

Syria to look east for oil markets

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The Syrian government says it has been approached by potential customers for its crude oil and developers for its oil fields, despite reports that the country is unable to export most of its oil output.

Imad Moustapha, Damascus’s envoy in Washington, says the country will be able to offset the impact of western sanctions by looking east.

Mr Moustapha would not elaborate on which companies or countries had contacted his government but Syria’s bravado underlines the difficulty that western nations have in trying to inflict economic pain on President Bashar al-Assad’s regime in a bid to make it stop its violent crackdown on six months of pro-democracy protests.

“It’s not that we are approaching people, it’s the other way around. We are being approached,” Mr Moustapha told the Financial Times. “But no contracts have been signed yet.”

The US has imposed repeated rounds of sanctions on the Syrian regime since the unrest began in March, most recently banning any US investment in Syria’s crucial energy sector and prohibiting US companies from buying Syrian oil.

The sanctions were mainly symbolic as the US has minimal involvement in Syria’s energy sector. But the European Union, which buys more than 90 per cent of Syria’s crude oil exports, followed suit with an oil embargo of its own.

The 27-member bloc, however, said members had until mid-November to stop importing oil, a grace period during which Syria could line up other buyers for its oil, thereby possibly limiting the immediate impact.

Mr Moustapha brushed off the American sanctions, saying the US had been taking such actions since the 1950s. But the European sanctions were a different story.

“Of course they are going to have a negative effect. They create a challenge for us to find a way to develop our economy and we are not denying that it will be a challenge,” he said.

Syria would be forced to shift its economic gaze eastward, Mr Moustapha said, just as Iran increasingly looked to China after chilling sanctions on its energy and financial sectors.

“We will re-orient our economy towards Asia, Africa and South America. We have a whole spectrum of options open to us,” he said.

Syria exports a heavy, sour crude oil called Souedie, chiefly to refiners in Germany, Italy, France and the Netherlands. Although it would be expensive to transport it beyond the Mediterranean Sea, both China and India have the technical capacity to refine this type of oil.

Ayham Kamel, a Middle East analyst at the Eurasia Group in Washington, said he would not be surprised if customers had been knocking on Syria’s door, looking to take advantage of the political situation to get a cheap deal.

“Syrian oil is already pretty cheap because it is one of the heaviest oils out there,” Mr Kamel said. “I think a lot of traders would be looking to get an even bigger discount.”

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