Syrian government gets badly needed diesel cargoes from Russia

Mon Dec 24, 2012 11:23am EST

Related Topics

* Reserves depleted, shortages critical - former oil chief

* Russian cargoes first large shipments to arrive in months

* Unclear if backed by Moscow or trading firm acting alone

* No evidence that cargoes violated sanctions against Syria

By Jessica Donati

LONDON, Dec 24 (Reuters) - Two cargoes of Russian diesel have reached war-ravaged Syria this month, providing the first significant volumes in months of the fuel it desperately needs to power industry and the military, generate electricity and heat homes.

Both shipments were transported from Russia on Italian tankers to a port controlled by Syrian President Bashar al-Assad, but it was unclear who was behind the shipments. Nor was there any evidence they violated sanctions against Syria.

"(Our vessels) loaded two cargoes of gasoil in Russia at the beginning of December for delivery to the East Mediterranean. The charterer then asked us to deliver the volumes to Banias," said Paolo Cagnoni, who heads Mediterranea di Navigazione S.p.A., the family-run Italian tanker firm.

He declined to disclose the names of the vessel charterers and the recipient of the deliveries, which amount to around 42,000 tonnes of gasoil worth close to $40 million at current market prices.

The first cargo was loaded at the Russian port of Novorossiiysk on Dec. 2 aboard the Ottomana, which sailed full steam to Syria and arrived in Banias five days later.

"It was doing 12 knots after the Bosphorus strait ... they went fast," said an oil products trader who monitors shipments from the Black Sea.

The latest shipment arrived at the Syrian port of Banias over the weekend aboard the Barbarica, and the vessel was still docked there on Monday morning, satellite tracking showed.

Shortages of diesel and other fuels in Syria have grown severe since the European Union introduced tighter sanctions in March.

The sanctions do not expressly ban all shipments of fuel but are aimed at a list of companies connected to the Assad government.

Trading firms that previously did business with Syria have dropped out of the market for fear of falling foul of the rules or becoming associated with Assad's bloody crackdown on civil unrest.

Cagnoni said the name and details of his contract were confidential.

"Before accepting their request, we complied with due diligence standards, which led us to conclude that none of the firms involved ... are banned by the European Union."

Syria announced in August that it had reached an agreement with Russia to exchange oil for refined products , and Russia has been an Assad ally, blocking three U.N. Security Council resolutions designed to pressure him.

But traders said there were no indications whether the deliveries were backed by the Kremlin or were the actions of a trading firm acting on its own.

Russian government officials could not be reached for comment.

"PEOPLE ARE SUFFERING"

Syria's fuel shortage has become critical, the retired president of the state oil firm Sytrol said in his first interview since the war began.

"It's (the fuel inventory) depleted very sharply ... I hope that they will sort out these matters, because people are suffering very much now," said Jaber Ghzayel, who retired in the summer, speaking by telephone from Damascus last week.

Sytrol has been desperately seeking deals to import diesel from as far away as Malaysia, but fear of being associated with an increasingly bloody civil war has deterred most firms from doing business with Assad's state.

The sanctions also have created logistical and financial complications by making it difficult for Syrian banks to process payments abroad and for traders to get insurance on cargoes.

Since the summer, Syria has received only one similarly sized cargo at government-controlled ports. In October an Iranian vessel arrived with a shipment of gasoil and returned with Syrian gasoline.

Diesel has since trickled into Syria aboard smaller vessels arriving from Georgia and Lebanon, but these shipments have averaged only around 7,000 tonnes each, about a quarter of the first 26,000 tonne Russian delivery.

"We found some new players ... it was persons rather than companies, some of them Syrians living abroad," Ghzayel said, adding that the deliveries covered less than 2 percent of the country's needs. (editing by Jane Baird)

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