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India abandons Syrian oil fields

Since the Syrian President has lost control over the country, the oil blocks in question have been taken by the rebels.

Kabir Taneja  New Delhi | 27th Apr 2013

he ONGC Videsh (OVL) consortium (under the ONGC Nile Ganga BV (ONGBV) banner), which includes FulinInvestments Sarl, a subsidiary of China National Petroleum Company International (CNPCI) and Syria's Al FuratPetroleum Co. has pulled out of the war torn northern part of Syria for the sake of the safety of its personnel and equipment. The consortium exercised its force majeure right in consultation with the government of Syria and moved its corporate offices to Dubai.

The consortium held 33.33% to 37.5% PI in four production sharing contracts (PSCs) comprising 36 production fields, which were operated by Al Furat Petroleum Co. The project was being managed through a Dutch joint venture company, named Himalaya Energy Syria B.V. (HESBV), wherein ONGBV and Fulin Investments Sarl, hold 50% shareholding each. This joint venture with China was India's second biggest such investment with its neighbour, with the largestone being in Sudan.

Along with this, India also has a 1,927 sq km block in the central-eastern part of Syria, called Block-XXIV, where OVL has invested nearly $44 million in Exploration & Production (E&P) activities.

Since Syrian President Bashar Al-Assad's government has lost control over the country, the oil blocks in question have been taken over by the rebels who, according to industry sources in Dubai and London, have started pumping oil from the OVL blocks to sell it in the market. The sales are to be used to raise money for their military action against the Assad government in Damascus.

Further, the rebels are also using the crude oil from these wells for production of petrol and diesel using "primitive refining infrastructure," according to sources close to the matter. Industry sources also say that this is an "exceptional situation," and that the OVL consortium is monitoring the situation from Dubai. However, the oil blocks are expected to stay out of bounds for years to come and the future outcome will depend on what happens in Syria in terms of the geographical unity of the country.

India has looked towards Syria in the recent past as a probablecandidate for importing crude oil due to increased difficulties in importing from Iran as stricter sanctions on the country were applied by the West. The sanctions on Assad's regime, on the other hand, only barred European Union (EU) members from importing crude from the country, giving India open access. However, by March of this year the Indian government refused to provide its sovereign guarantee for oil imports from Syria as New Delhi voted in favour of a UN resolution, which backed an Arab League call asking for President Assad to step down. Since then Indian companies have increased their imports of crude from Iraq, now a major player in the exploration and production sector.

Syria in the past has had an estimated production of 385,000 barrels of oil per day. However, current production estimates are not available, and the loss of production is estimated to be nearly $5 billion for the Syrian economy.

India is currently still maintaining diplomatic relations with the Syrian government in Damascus.

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