WarSclerotic

Syrian pipeline attack raises supply threat – FT.com.

Rebel fighters have blown up a key oil pipeline in Syria, in their first significant attack against the oil industry since the uprising began nine months ago.

Damascus confirmed the attack on Thursday, blaming “terrorist groups”, according to the state-run Syrian Arab News Agency. “A destructive terrorist group targeted a crude oil pipeline in Tal Al-Shur, north-west of Homs refinery,” the agency said.

The British-based Syrian Observatory for Human Rights claimed that opposition groups attacked the pipeline, which it said was the main feed to the Homs refinery. A video posted on YouTube showed a large plume of black smoke and some fire.

The Homs refinery is the second largest in Syria, with a capacity to process about 107,000 barrels a day from domestic oilfields, according to the US Department of Energy. The country’s largest refinery is located at the Mediterranean port of Banias.

The so-called Arab Spring has disrupted oil markets throughout 2011, with lower oil supplies in Libya due to the civil war, in Yemen and more recently in Syria.

The attack had a brief bullish impact on global energy markets, which focused on concerns about the eurozone debt crisis. ICE Janaury Brent rose in early trading to $109.60 a barrel but in late afternoon trading in London it was down $1.50 to $108.01 a barrel. Nymex January West Texas Intermediate fell $1.69 to $98.78 a barrel.

The explosion, which followed an attack on a smaller pipeline in late July, is a reminder of the fragility of the oil industry in the region, analysts said. The European Union has already imposed an embargo on oil exports from Syria that has forced the country to reduce production from 380,000 b/d to about 250,000 b/d as Damascus has failed to find new customers for its oil.

The attacks come as oil analysts and diplomats anticipate that Syrian crude oil production will drop further in coming months after oil companies Royal Dutch Shell and Total of France ceased their operations in the country following a new round of European sanctions. The EU said last Friday that it had widened its sanctions to include the Syrian state-owned General Petroleum Company, Al Furat Petroleum Company and Syria Trading Oil Company.

The UN has warned that more than 4,000 people have been killed in the unrest since March and more than 14,000 people are believed to have been held in detention. Syrian activists said at least 950 people were killed in November, making it the bloodiest month in the uprising against the regime of Bashar al-Assad.

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