The firm that keeps heating oil flowing to Assad's Syria

LONDON (Reuters) - Oil traders arranging millions of dollars worth of fuel shipments to Syria sit in the office of a little-known firm in Greece.

The fuel, liquid petroleum gas for cooking and domestic heating, is not covered by international sanctions against the government of President Bashar al-Assad, but some critics charge that by keeping the supplies flowing the firm, Naftomar, may be lessening the risk to Assad of a wider revolt.

One of the traders is a U.S. national. Some of the fuel shipped from floating tanks in the Mediterranean may come from Saudi Arabia, a critic of Assad's crackdown on his opponents. This is possible because Naftomar stores and mixes fuel from many different suppliers in the Mediterranean.

International sanctions do not apply to liquefied petroleum gas (LPG) for humanitarian reasons. Indeed, by providing heating and cooking fuel the firm says it may well be preventing an even worse disaster in a country where a year of violence has already claimed over 7,500 lives, according to U.N. estimates.

"We would tend to feel that it is unfair to deny such a basic commodity as LPG to consumers as part of a political statement. Currently there is no embargo to supply LPG to Syria which we believe is for humanitarian reasons," Naftomar director J.C. Heard said in a statement.

Some critics charge that by delivering the fuel, worth at least $55 million each month, Naftomar may be helping to extend Assad's rule. "We advise anyone that is cooperating with the regime right now to stop supporting it. Traders or otherwise, we advise them to take a firm stance against Bashar al-Assad," said Melhem Al-Droubi from the opposition Syrian National Council.

"At some point we are going to give a notice period to these people and after that if they don't take a position, they will be considered partners in killing and partners in the repression of the Syrian people," he said. Old allies Russia and Venezuela still send cargoes of other fuels, including diesel which can be used to run army tanks. But imports of LPG, a peaceful material, hinge on Naftomar. Best known as a barbecue fuel in many places, these small canisters play a vital role in countries with limited infrastructure for piping gas.

"While it is very difficult (and outside our scope) to make political judgments, we understand that the LPG that is imported into Syria is used for domestic uses such as heating and cooking," Heard said in Naftomar's statement.

A spokeswoman for European Union foreign policy chief Catherine Ashton said the bloc did not impose sanctions on refined oil products "because of potential effects on the Syrian population". A source in one EU member state involved in drafting the sanctions on Syria said that was unlikely to change in the near future.

OTHER OIL FIRMS CUTTING TIES

International sanctions have halted Syrian oil exports since September 2011, stretching budget revenues. Attacks on pipelines by rebels have also almost idled Syrian refineries and made it more dependent than ever on foreign deliveries.

Syria consumed some 840,000 tonnes of LPG in 2009, according to the International Energy Agency and traders say Naftomar is effectively the only party supplying Syria at the moment.

Other oil firms, including the world's biggest trader Vitol and Italy's oil and gas firm Eni say they have no relations with Syria. Market participants familiar with their business say they will not deal with Syria for fear of being associated with its rulers.

Sytrol, the Syrian oil company responsible for fuel imports and exports, was placed on a U.S. blacklist last summer and the European Union followed suit in December. The Syrian central bank is also blacklisted. As a result, difficulties processing payments have prevented even willing oil firms from doing business with Syria.

A source familiar with Syria's LPG business said Naftomar can keep up deliveries because it is dealing with state-owned, Damascus-based distributor Mahrukat. Also called the Syrian Company for the Storage and Distribution of Petroleum Products, it does not yet feature on the sanctions lists.

This week, a U.S. House committee voted to impose new sanctions on Syria's energy sector which would effectively ban the delivery of refined petroleum products.

Sytrol and Mahrukat were not available to comment. A cold snap in the Mediterranean region, which sent temperatures to record lows last month, has caused LPG prices to rise.

Samir Nashir, from the executive council of the Syrian National Council, representing the opposition, said he believed there are many opposition areas that have been blocked from receiving fuel, electricity, water and humanitarian assistance.

"This is one of the group punishments against areas that have flared up with protests against the regime," he said.

"There are businessmen that are backing away from the regime but others whose wealth was made by their relationship with the regime so they are dependent on it. They will defend this regime to the very end and we won't be able to convince them to change this. Their end will come along with the regime."

Naftomar says on its web site it has been "on the leading edge" since it was founded in Beirut, Lebanon, in 1972. With sales of $2.7 billion in 2008, according to the latest available data, the website says it is a pioneer in LPG imports into Pakistan and Syria, and was instrumental in encouraging LPG imports into China.

Behind the white-washed walls and leafy treetops of Naftomar's office in Athens, the leading figure in this trade is a man described by his peers as a Syrian national, with links to Greece's shipping elite and ties to Lebanon. Talal Zein founded Naftomar in Beirut and the trading house has since grown to dominate the heating fuel business in the east Mediterranean, with a fleet of more than 20 vessels.

Ship tracking data shows one of the most recent deliveries to the Syrian Mediterranean port of Banias arriving aboard Naftomar's "Gaz Explorer" tanker. Last year, Naftomar was among the first to bring vital shipments to the Libyan rebels in besieged Misrata, according to shipping data and market sources.

Naftomar gets its LPG supplies from Russia, Algeria and Saudi Arabia, according to market sources. The origins of the liquid gas are difficult to trace because it is mixed in Naftomar's floating tanks in the Mediterranean. Supplies often reach Syria through Lebanon, where Naftomar has large storage capacity. Traders say and shipping data show that Naftomar supplies around 50,000 tonnes of LPG a month to Syria.

Industry sources say Talal Zein has handed down most of daily operations to his nephews and son-in-laws, Riad and Imad Zein. The sources, who declined to be named because of the sensitivity to their business, also identify U.S. national J.C. Heard as a commercial director at the company. Heard said: "We have a term arrangement to supply LPG to Syria and We hope that the situation improves in Syria and that LPG can continue to be supplied to meet the needs of the general public."

At current market prices, Naftomar's LPG business with Syria is worth around $55 million a month. In Syria, Talal Zein is praised by some in the medical community for his philanthropic work. "Zein exemplifies the ideal Syrian national, living outside his country of origin," the Syrian Cardiovascular Association, which has awarded over 20 prizes worth around $3,000 on Zein's behalf, wrote during its congress in 2009.

(Reporting by Emma Farge, Jessica Donati, Dmitry Zhdannikov, Erika Solomon and Sebastian Moffett; editing by Janet McBride)

Source: http://news.yahoo.com/firm-keeps-heating-oil-flowing-assads-syria-124303779.html

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