Enab Baladi – Muhammed Fansa

The recent visit of the President of the Syrian regime, Bashar al-Assad, to Tehran activated the “new version of the credit line.” As a result, four oil tankers arrived on the Syrian coast last June, containing a total of 3.3 million barrels of oil. This raises questions about the actual impact of the incoming quantities on the fuel crisis, in contrast to the size of oil needs in regime-controlled areas.

Al-Assad met his Iranian counterpart, Ebrahim Raisi, and the Supreme Leader of the Iranian Revolution, Ayatollah Ali Khamenei, on an official visit to Tehran on 8 May, during which Khamenei said that “the relationship between Iran and Syria is fateful, and we must not let it weaken, but rather it must be strengthened as much as possible,” according to what was reported by the Syrian newspaper close to the regime, al-Watan.

Following the visit, the arrival of Iranian oil tankers began in light of a stifling fuel crisis in regime-held areas. On 17 June, the same newspaper announced the arrival of two oil tankers from Iran, describing them as “the first signs of activating the new credit line.” The first tanker carried 250,000 barrels, while the second carried 1.5 million barrels of crude oil.

On 16 June, the Director-General of the Banias Refinery, Mahmoud Qassem, announced the imminent arrival of the third tanker loaded with about 300,000 barrels of oil, noting that “breakthroughs” in the oil derivatives crisis would be observed by citizens early in the following week.

On 29 June, a source from the Baniyas port said that, on the same day, a fourth oil tanker is scheduled to arrive at the oil port, loaded with 1 million barrels of crude oil, and that it will be unloaded as soon as it enters the port’s estuary.

Iran’s oil supplies to Syria in June totaled 3.3 million barrels of crude oil, while the country’s daily need for crude oil is 200,000 barrels (6 million barrels per month), according to Syrian regime government officials. Daily domestic production is estimated at 20,000 barrels, according to the regime’s Prime Minister, Hussein Arnous, on 13 April 2021.

Relative crisis decline during summer

The Syrian regime’s government anticipated a “breakthrough” in the fuel crisis after the arrival of the first two oil tankers in mid-June, supposedly supplying the stations with important quantities. The Ministry of Oil and Mineral Resources said the increase in the quantities distributed would have a positive impact on reducing the time for receiving gasoline notifications and relieving crowding at gas stations.

A video posted on 5 July via a local network shows a long queue at a gas station in the northern Syrian city of Aleppo. Despite officials’ repeated promises of oil crisis breakthroughs that would be reflected in most other sectors, imports of oil derivatives into the governorates have not improved. In addition, residents of regime-held areas did not notice any improvement in the availability of gasoline and diesel, or a decrease in fuel prices on the black market, as monitored by Enab Baladi.

In a talk with Enab Baladi, researcher and oil engineer Saad al-Sharaa, describes the relationship between the arrival of oil supplies and the improvement in the fuels situation in Syria as a “direct relationship,” despite the great need for crude oil on a monthly basis. He considers that the fuels market will experience “relief,” especially as demand for heating diesel decreases relatively during the summer compared to winter.

As stated by al-Sharaa, the regime relies mainly on oil supplies coming from AANES-controlled areas east of the Euphrates, such as the al-Omar oil field, but are estimated to be hundreds of tanks that arrive weekly at oil refineries in Homs and Baniyas that do not even cover the area’s oil needs.

Last month, the local Global network reported that the Iranian credit line is not a solution to the fuel crisis but rather “prevents a catastrophe” that would cripple people’s lives and the economy. The report also stressed that the economic feasibility of the Iranian line is to supply the minimum amount of fuel required to secure the minimum electricity required to maintain production and to provide hours of lighting that “would not turn people’s lives into a living hell.”

What does Iran gain in return?

The Syrian regime’s government announced last month the start of Iranian oil supplies based on the activation of the “new credit line.” At the opening of the first conference for investment in renewable energies, Syrian Prime Minister Hussein Arnous said, “Soon enough, oil shipments will start coming to Syria, as the procedures for (the new credit line) have been completed,” but without declaring the line’s value.

Damascus relies on the new “Iranian credit line” to cope with the intensification of the fuel and energy crisis that has been renewed since last February and has led to a severe transport crisis and price hikes for the majority of materials and commodities, in parallel with global inflation and soaring prices of basic foodstuffs resulting from the Russian war on Ukraine.

A credit line is a type of financial facility and concessional loans granted by banks and financial institutions according to a fixed limit on the amount that can be withdrawn as long as the repayment date is met. The credit line can also be increased once its balance has been exhausted by agreement between the parties. The concept of this line differs in the Iranian-Syrian case, as the Syrian regime does not have the financial capacity to pay off debts.

The first credit line opened by Iran to Syria was established in 2013 with a value of 1 billion dollars in concessional interests, followed by another 3 billion dollar line to finance the country’s oil and derivatives needs. In 2015, a new 1 billion dollar credit line was opened, while the last line was stopped three years ago without giving reasons.

In exchange for the credit line, Iran benefits from new acquisitions in Syrian territory. Under the last credit line, it obtained sectors 19 and 20, which represent geographical areas located south of the city of al-Bukamal, reaching the Syrian-Iraqi border where Iran built the Imam Ali military base, according to the researcher.

According to al-Sharaa, Iran now has maritime links between the port of Latakia and the Iranian port of Bandar Abbas by virtue of the credit line. Iran also seeks to gain more control over the port of Latakia in the face of Russia, as well as over the Syrian phosphates extracted from the vicinity of the city of Palmyra in central Syria.

Pacification

Recently, an Israeli report was published about Israel allowing Iran to transfer oil to Syria as part of a deal sponsored by the US to “revive” the nuclear agreement between Tehran and world powers. The report stated that if Israel agreed to transfer oil, it would be subject to full US oversight and Iranian transparency to ensure that the mechanism was not used for arms transfer.

Researcher Saad al-Sharaa said that these reports of an American-Israeli understanding that occurred about two months ago before the start of nuclear negotiations in Qatar were American pressure on Israel for “pacification” with Iran before entering into negotiations. One such pressure was its request to Israel to cease airstrikes targeting Iranian militias, except when it is “absolutely necessary,” pending the conclusion of negotiations.

In the face of the intense political movement and the failure of the Vienna talks, The Iranian nuclear team’s media advisor, Mohammad Marandi, announced on 27 June that Qatar would host the talks based on Iran’s choice of Qatar “as our friend,” according to Marandi.

The two-day round of indirect talks in Qatar between Iran and the US concluded with European disappointment, expressed by the EU coordinator for the talks, Enrique Mora, on Twitter on 29 June, when he said, “Two intense days of indirect talks in Doha. Unfortunately, the progress that the EU team had hoped for as coordinator has not yet been achieved”.