Iran and Syria swap fuels as both aim to dodge sanctions

LONDON Wed Oct 31, 2012 9:29am EDT

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LONDON Oct 31 (Reuters) - Iran and Syria have arranged a gasoline-for-diesel swap, helping each other overcome international sanctions that have cut them off from fuel supplies needed to keep their economies afloat and support their armies.

Tracking data shows that a tanker from Iran arrived in Syria with a cargo of fuel, and a shipper who works in the region said Iran was delivering diesel to Syria in return for gasoline.

U.S. and European Union sanctions have virtually ground Syria's trade in oil and refined products to a halt, while Iran is struggling to sell its crude as buyers around the world cut purchases.

Syria's economy has been strangled by a lack of diesel needed to power heavy vehicles and machinery used in industries and farming.

Iran's rial faced collapse earlier this month in a sign that economic pressure on the government is building and that oil sales to some of its best customers are in decline.

An Iranian oil tanker called the Hillari arrived in the port of Banias a week ago and delivered a 34,500 tonne cargo of gasoil, an industry term for diesel, the shipper said and tracking data showed.

The vessel has now finished loading a similarly sized cargo of gasoline at the Syrian port, the shipper said, and is likely to be bound for Iran, where it will complete another round trip between the two countries with precious supplies of fuel.

While both countries are oil exporters, they lack the capacity to refine certain types of fuel. Syria's light crude means it produces more gasoline and naphtha than it needs, freeing up volumes for export.

Iran's sour crude by contrast, is easily refined into heavier fuels such as diesel, leaving it short of gasoline to run vehicles. As a result, the countries are perfectly matched to swap fuels.

A similar trade occurred over the summer, when the same tanker, operating with a different name, arrived in Syria at the end of June and departed in early July to complete an exchange of fuel.

The vessel in April made at least one other round trip between Syria and Iran after tighter Western sanctions cut off a stream of Russian deliveries to Syria. (editing by Jane Baird)

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