Lebanon fuel re-exports to Syria diminishing

Syrian tanker trucks are seen outside the Zahrani refinery, Wednesday, Feb. 13, 2013. (The Daily Star/Mohammed Zaatari)

BEIRUT: Only one dealer remains in the controversial business of re-exporting gasoil to Syria, a senior industry official said, while Lebanese customs data showed a 33 percent decline in fuel imports during the first quarter of 2013.

“Strong pressure placed by Lebanese banks, dropping margins of profits and higher risks – especially attacks on fuel trucks – all combined to making the trade fall out of favor,” Dania Nakad, general manager of Wardieh Holdings Inc., told The Daily Star. “Quantities of fuel oil exported to Syria plummeted to very marginal quantities.”

As Lebanese fuel re-exports to Syria diminished, smuggled Syrian gasoline and some gasoil have been increasingly present in the local market, Nakad added, highlighting that Syrian gasoline subsidies continue to make the illegal trade very lucrative.

While sector officials have previously said the smuggled fuel is concentrated in north Lebanon and the Bekaa Valley, Nakad said it was now being sold across the country.

She estimated that out of the 33 percent decline in imports, 13 percent was explained by the continued stagnation of the Lebanese economy, with the rest caused by the drop in re-exports.

Such a sharp decline in fuel imports does not reflect the variation in local consumption, Chief Economist at Byblos Bank Nassib Ghobril told The Daily Star, echoing Nakad.

“We have stagnation in the economy and a drop in the number of tourists so there is probably moderate decline in consumption ... but this does not justify alone such a drop in fuel imports,” he said.

Lebanon’s trade deficit confirmed the trend, as it recovered in the first quarter of 2013, dropping over 10 percent to $4.3 billion from $4.8 billion a year earlier.

While the value of non-hydrocarbon imports increased 8.6 percent to $4 billion, hydrocarbon imports declined 33.8 percent to just $1.5 billion, according to a Byblos Bank weekly economic report issued Saturday.

Changes in oil prices do not account for the drop, as hydrocarbon imports by volume fell a comparable 32.4 percent to 1.88 million tons and non-hydrocarbon imports increased by 8.2 percent to 1.93 million tons.

The lower trade deficit was reflected in Lebanon’s balance of payments, which posted a deficit of $62.2 million in the first quarter of 2013, compared to a deficit of $373.2 million in the same quarter last year.

The balance of payments posted deficits of $1.54 billion in 2012 and $2 billion in 2011 and surpluses of $3.3 billion and $7.9 billion in 2010 and 2009 respectively.

Throughout 2012 Syria appeared to have become increasingly dependent on fuel imports from Lebanon to cover shortages caused by European and U.S. sanctions prohibiting companies from having financial dealings with the Syrian government.

The Syrian government in early 2013 authorized Syrian private companies to import fuel, a measure intended to reduce the impact of the sanctions.

Since February Lebanese protesters have blocked roads to Syrian fuel trucks and in several cases torched what they said were shipments intended to the Syrian regime.

The Syrian government retaliated by barring Lebanese trucks from passing through Syria for more than 40 days before reportedly allowing them access Thursday.

A version of this article appeared in the print edition of The Daily Star on May 13, 2013, on page 5.




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