Mourad Abdul Jalil – Dia Odeh – Ahmad Jamal
The empty streets and squares and the long queues of cars waiting at gas stations, are daily scenes reflecting the reality and struggle of citizens in the regime-held areas, in light of a severe fuel crisis, which the Ministry of Oil in the regime government faces by merely thanking citizens “for their sense of patriotism and patience” and describing it as a temporary circumstance”.
Caught between the fear of the worsening crisis and its future repercussions on the industrial sector and the prices of basic materials and food, the citizen keeps hearing the repeated promises of government officials, who camouflage the bitter reality and conceal it behind the slogans of resistance and patriotism. It is indeed, the reality of the worsening crisis and the lack of signs to resolve it once and for all.
Although the crisis has an explicit economic dimension that directly affects citizens, there are still implicit political motives behind it. The United States affirms that the goal of the sanctions is to disrupt the ability of the regime’s president, Bashar al-Assad, to fund his violent campaign against the people and force him to step down.
The allies of the regime, Russia and Iran, are both trying to capitalize on the economic hardship they are going through in order to make concessions that would enable them to obtain sovereign investment projects for decades, as has recently been the case of Russia that hired the strategic port of Tartous for 49 years.
In this investigation, Enab Baladi probes the most important indicators behind the hydrocarbon crisis in Syria, the ways in which it is secured by the regime under economic sanctions, in addition to the political conflict between the international parties and its relevance to the crisis.
A man in the countryside of Raqqa in front of a pit of petrol – April 15, 2013 (AFP)
Real crisis… America tightens sanctions and citizens are the most affected
In light of the regime’s previous experiences in igniting crises affecting citizens for political purposes, there have been different opinions about the causes of the current hydrocarbon crisis as some have considered it prelude to phase out fuel subsidy and sell it at free prices.
However, economic analysts interviewed by Enab Baladi have agreed that the fuels crisis is a fact and it is confirmed by several indicators, most notably the regime’s loss of control over oil wells over the past years, the lack of the oil reservoir represented by the East Euphrates region, which is currently controlled by the Syrian Democratic Forces (SDF) and the latter’s threat not to supply the regime with oil through trucks.
This has led to the loss of the volume of production that used to be 385 thousand barrels per day before 2011. As for now, the volume of oil production from areas, over which the regime has regained control in the south of the Euphrates River, reaches only 24 thousand barrels per day, as reported the pro-regime newspaper al-Watan on April 17.
The second indicator is the lack of Iranian supplies and the suspension of a one-billion dollar credit line signed by the regime with Iran in January 2017, of which 500 million dollars had been allocated to support the import of oil derivatives, through which the regime had imported 90 percent of its oil needs. This credit line had then been suspended last year because of the US sanctions on Tehran, and its tightening on the sea and land routes, as confirmed by Economic Analyst Munaf Quman to Enab Baladi.
Director General of the Syrian Company for the Storage and Distribution of Petroleum Products (Sadcop) of the Ministry of Oil in the government of the Syrian regime, Mustapha Hasawiya, said in an interview with Syrian News Channel (al-Ikhbariyah Syria), aired on Saturday, April 13 April, that the Iranian credit line signed with the government to supply crude oil from Iran to Syria had been suspended since October 20, 2019, adding that Iran used to supply Syria with millions of barrels of oil per month, and the quantity reached three million barrels in some months. However, since the last six months, Syria had not received any tanker from Tehran.
Taxi drivers pushing their cars empty of gasoline to a fuel station in the Syrian capital DAMASCUS, April 16 (Reuters)The country’s government has faced a barrage of international sanctions since the conflict started in 2011, including measures impacting the import of petroleum-related products. (Photo by LOUAI BESHARA / AFP)
The US tightens sanctions
USA’s tightening of sanctions has not only been limited to Tehran, but it has also included warnings from Washington against those who contribute to supplying the Syrian regime with fuel, be they individuals or transporting companies. The Office of Foreign Assets Control (OFAC) of the US Department of the Treasury warned in a statement issued by the Office of Public Affairs of the US Department of the Treasury, on March 26, which reached Enab Baladi, the Maritime Petroleum Shipping Community from the risks associated with transporting oil shipments to Syria.
The statement, which is an update to a previous warning issued on 20 November 2018, added the names of dozens of new tankers participating in illegal shipments of oil, including 16 tankers that ship oil to Syria.
The US warning came after the Syrian regime and its allies circumvented the sanctions through several ways, as admitted by the Ministry of Oil in its statements to al-Watan newspaper on April 17. The ministry confirmed that after the suspension of the Iranian credit line, it started looking for solutions to circumvent the economic sanctions, by signing land, sea, and air supply contracts through neighboring countries.
Four methods the regime used to circumvent sanctions
The US Department of the Treasury has identified four ways with which the regime has circumvented US sanctions on the importation of fuels:
– The falsification of shipping and ships documents. The companies that supply fuel to the regime resort to falsifying bills of shipment, certificates of origin, invoices and lists of charging, and proof of insurance, which usually accompany the shipment transaction, with the purpose of covering the destination of oil shipments.
– Ship to ship transfer (STS), a means of transporting goods between ships while in the sea rather than in the port, which could cover the origin or destination of the goods.
– Ships transporting fuel to the regime intentionally disable the Automatic Identification System (AIS), which is an automatic tracking system for ships that identifies their identities and location.
– Changing the ships’ owners and names in an attempt to cause confusion on their illegal activities. Therefore, it is necessary to search for any ship not only by name, but also by their IMO number.
Washington also stressed the seriousness of the sanctions on the parties and countries that allow the passage of oil tankers to Syria, such as Egypt through the Suez Canal, Iraq, which allows the passage of their tankers by road, or the SDF, which allows the passage of a number of trucks, as stated by the President of the Syrian Economic Task Force, Osama Kadi, to Enab Baladi.
Syrian Prime Minister Imad Khamis said on April 8 that the Egyptian Suez Canal has been preventing, for the last six months, the passage of oil-loaded ships to Syria. He added that “all attempts and communications have failed to convince the Egyptian side to allow the passage of one tanker.”
According to the Lebanese newspaper al-Akhbar, Advisor to the Ministry of Economy of Iran, Maytham Sadeghi stressed, on April 11, that “Egypt has been preventing, for a long time, the passage of oil tankers, in compliance with US sanctions.”
A catastrophic scenario
“We are facing a catastrophic scenario,” with these words, economic analyst Munaf Quman described the effects of the crisis if it continues and in case the regime adheres to its choices and practices, because of the possibility of their impacts on different sectors, most notably the agricultural sector.
Quman added in an interview with Enab Baladi: “If the US prevents the SDF from supplying the regime with petroleum tracks, and if any land or sea shipment of oil destined for Syria from Iran is targeted, the regime will only be left with the fields and wells under its control, which would be enough to cover up only a small portion of its needs. As a result, the country will face a significant rise in food prices and a devaluation of the Syrian lira.”
The Syrian market needs a daily minimum of 4.5 million liters of gasoline, six million liters of diesel oil, seven thousand tons of fuel and 1,200 tons of gas, the President of the Syrian Economic Task Force, Osama Kadi, told Enab Baladi.
According to Kadi, this means that the government of the regime needs 200 million US dollars a month, while it owns a reserve of only about 700 million dollars, which is enough for about three months. In addition, the current oil production is about 20 thousand barrels, while its needs 136 thousand barrels per day, bringing the deficit in the diesel to 90 days, gasoline to 108 days, and gas to 45 days.
Kadi pointed out that the recent fuel crisis has worsened the living conditions of the Syrian citizen, who has already been suffering from very low living conditions, high unemployment rates, poor services, rampant inflation, low exchange rate of the Syrian lira, doubled transport costs (collective and normal taxis) to compensate for the loss of time, only to get 20 liters that the Ministry of Oil has set up for each car.
The government of the regime has recently started selling the price of one liter of gasoline at free price through mobile containers in the capital Damascus. On Tuesday, April 16, Damascus Governorate set up a mobile station to secure octane 95 gasoline in Mezzeh area at 600 Syrian pounds per liter.
This is the first time that the ministry sells gasoline at the free price, though it was a government-subsidized material, and the price of one liter did not overcome 225 Syrian liras.
Ways the regime resorts to in order to end the crisis
Amid strict sanctions and the prevention of any oil tanker from reaching Syria, the regime has resorted to the signing of land and sea supply contracts through neighboring countries with a number of oil suppliers. However, these contracts have been hindered, either for logistical reasons or because of the technical side that obstructs their arrival, al-Watan newspaper reported on April 17. This means that the regime is forced to look for other ways to secure oil derivatives.
The President of the Syrian Economic Task Force, Economic Expert Osama Kadi, believes that the regime will resort to Russia to send its ships across the Black Sea and then the Bosporus Strait to enter its tankers through Turkey. The regime will also resort to Iran’s mediation with Turkey to bring oil through its territories.
This means the passing of the oil shipments from Turkey to the regime’s areas through the northern countryside of Aleppo controlled by the Turkish-backed Syrian opposition groups, which opened in March Abu al-Zindin crossing in the western part of al-Bab city, leading to the regime-controlled village of al-Shamawiya.
Fuel shipments had been transferred from the SDF-controlled areas in northeastern Syria to the regime-controlled areas through Abu al-Zindin crossing before the National Army, active in the region, issued a decision to ban the fuel exportation through the crossing, “based on public interest requirements,” according to a statement issued by the National Army on Wednesday, April 17.
Kadi also believes that the regime will resort to the SDF to pass fuel tanks (via intermediaries such as al- Qatergi family), which was confirmed by the Oil Ministry in the regime’s government in its statements to al-Watan newspaper, saying it is seeking to import oil from the northeastern region.
If this is accomplished, it will allow the SDF to impose their political conditions in the negotiations with the regime after lengthy discussions between the two sides, during the previous year, which did not lead to any agreement.
However, Kadi believes that the SDF are just an American tool in Syria. They cannot violate US orders, and any negotiation process they conduct with the regime will be closely monitored by the Americans. This is a test of the seriousness of economic sanctions to push for a political solution, as Kadi put it. He pointed out that the fuel artery from eastern regions that may ease the crisis is a card with which the Americans pressure the regime to accept the political solution.
Kadi added that despite the prevention of the SDF from shipping fuel to the regime-controlled areas, this does not preclude allowing the passage of 100 fuel tanks from time to time as a gesture of goodwill, to push for a political solution, as he put it.
Nevertheless, all these solutions may temporarily solve the crisis through one of the parties. They will however remain “fake” solutions, according to Kadi, and they will soon disappear. Economic crises will thus return, and from which those who live in Syria will suffer, “unless the regime and its allies become convinced about the need to start a real political solution.”
