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E.U. sanctions force Shell to leave Syria

Protesters opposed to Syrian President Bashar al-Assad face violent responses from security forces. The Arab League passed a series of measures censuring Syria for its actions.

By Javier Blas, Published: December 2

LONDON — Royal Dutch Shell said Friday it will “cease” activities in Syria after the European Union blacklisted three state-owned Syrian oil companies in an effort to raise the pressure on President Bashar al-Assad’s regime.

The European Union said Friday it has widened its sanctions on the oil companies, General Petroleum Co., Al Furat Petroleum Co. and Syria Trading Oil Co. The move is seen as a significant blow to Syria, with diplomats expecting it to curtail oil production in the country.

The Syrian groups are the local partners of various foreign oil companies, forcing them to stop working in the country.

Shell said it will cease its activities in compliance with sanctions. “Our main priority is the safety of our employees, of whom we are very proud,” the company told the Financial Times. “We hope the situation improves quickly for all Syrians.”

Industry officials say they believe that other European oil companies operating in the country, including Total of France and the London-listed Gulfsands Petroleum, will follow. Gulfsands said it would “comply with all of the latest E.U. sanctions” but would not comment on how that would affect its operations. Total did not respond immediately to a phone call seeking comment.

Royal Dutch Shell and Total are among the largest foreign investors in the Syrian crude oil industry. State-owned CNPC of China and ONGC of India are also large investors but will be unaffected by the European sanctions.

Separately, the U.N. Human Rights Council attacked Syria’s crackdown on opposition protesters and appointed a special investigator to probe abuses in the country. While 37 countries voted in favor of a resolution backed by the Arab League, the U.S. and European countries, Russia, China and four other members voted against, with six abstentions.

Navi Pillay, the U.N. high commissioner for human rights, told an emergency session of the council that more than 4,000 people had been killed in the repression since March and that more than 14,000 people were believed to be held in detention.

Syrian activists said at least 950 people were killed in November, making it the bloodiest month in the uprising against Assad’s government. Violence was reported throughout Syria on Friday. At least four people were reported to have been killed and dozens injured.

Diplomats in Brussels have begun informal discussions about what Syrian entities might be targeted by a next round of sanctions, although this would require weeks of negotiation and legal work before anything could be agreed to. Some member states want to place more emphasis on the country’s financial system, which has previously escaped sanctions, partly because of opposition from nearby Cyprus.

The European Union first imposed an embargo on oil exports from Syria in September, forcing the country to reduce production from 380,000 barrels a day to about 250,000 barrela a day one month later. Damascus has failed to find new customers for its crude, according to oil traders’ estimates. The country has also struggled to import refined products such as diesel.

Although Syria is a small crude producer, the global oil market is so tight that the loss of supplies has already been felt. The cost of Urals, a Russian crude of similar quality to some of the Syrian oil, has surged to unusually high levels against Brent crude, the global benchmark, as a result. Brent traded on Friday at $109.50 a barrel.

The latest round of E.U. sanctions would complicate the efforts of Damascus to secure refined products, industry sources said. Brussels blacklisted Sytrol, also known as the Syria Trading Oil Company, which traditionally handles fuel imports. Although Syria is an oil producer, the country lacks enough refining capacity to meet its demand and usually buys market diesel and liquefied petroleum gases in the Mediterranean.

The sanctions would probably come as a relief to Shell, providing a cover for the company to leave a country that represents a tiny fraction of its global business but has became a reputational problem. The London-listed company is unlikely to stop its operations overnight but rather wind them down over the next few weeks.

— Financial Times


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