Royal Dutch Shell announced that it was pulling out of Syria, a day after the European Union imposed new sanctions on the regime of Bashar Al Assad, lawyers for other oil companies active in Syria are now poring over the text of the latest bans to assess the implications for their operations there. Some have already indicated that they may follow Shell's lead.

The Anglo Dutch energy company was forced to act after the EU blacklisted an operating company in which it holds a stake, Al Furat Petroleum Company. It is one of 11 companies that were added to the EU's sanctions list on Thursday. Syria's state owned national oil company, General Petroleum Corporation is also on the list.

Shell has also experienced financial problems in Syria recently according to industry observers. Companies working there sell the oil they produce to GPC. But GPC has struggled to make payments as Syria's cash reserves dwindle.

According to Egbert Wesselink of IKV Pax Christi, a Dutch group that advocates for peace in conflict areas, Shell hasn't been paid at least for the last week.

The tightened sanctions are the latest response to the bloody crackdown on opponents of Al Assad. UN officials have estimated the death toll in Syria's 8 month uprising at more than 4,000. The EU also announced an export ban on key technology for Syria's oil and gas industry, a ban on trade in Syrian public bonds and a prohibition on Syrian banks opening new branches in the EU.

Shell said that it was ceasing its activities in Syria ‘in compliance with sanctions. The move won't have much of an impact on Shell's business. Its operations in Syria are run through a subsidiary called Syria Shell Petroleum Development which is 65% owned by Shell and 35% by China National Petroleum Company. SSPD in turn holds a 31.3% stake in Al Furat which operates three production licences in Syria. That means Shell's share of Al Furat's production is only 13,000 barrels of oil equivalent a day, a tiny fraction of Shell's global output of three million barrels a day.

Total SA, the French oil company which produces three times more oil in Syria than Shell said it was ‘assessing the situation' and insisted it would comply with all sanctions. But its situation is less clear cut than Shell's. Total's joint venture partner is the Syrian Petroleum Company which, unlike Al Furat, is not on the sanctions blacklist. However, SPC is an affiliate of Syria's state oil company, which is on the list.
(Sourced from Gulf News)