Economic disasters in Syria - will remain for a long time
The Syrian economy is being thrown back for years as a result of clashes between the government forces and armed opposition lasting for about 18 months. Everything that has been created through excessive labour for years is being destroyed at an incredible speed. Damage is being caused to infrastructure, housing stock, the tourism sector, industry and the agricultural sector. People are dying, hundreds of thousands of refugees left without shelter.
The war radically undermined the already weak economic foundations, created economic uncertainty, when impunity always prevails over the law, when a small minority makes huge profits taking advantage of their privileged positions while the vast majority of the population is rolled back to the line of absolute poverty.
It is known that about three million Syrians now face the threat of famine due to losses in the agricultural sector which this year is $1.8 billion. Since the conflict began, tourist trips to the country almost stopped and therefore, the country has lost $8.3 billion in revenue (the amount the country received in 2010). These two sectors were the main sources of income of ordinary Syrians and the budget. According to statistics for 2009, in Syria, agriculture accounted for 17.7 per cent of the GDP, the service sector -55.8 per cent and industry - 26.5 per cent of the GDP.
Oil has also been a major source of export earnings as long as its export wasn't subject to Western sanctions. Losses from international sanctions against the Syrian authorities were calculated as yet for May totalling $4 billion. A ban on oil imports from Syria imposed by the European Union in September 2011 cost the country $4 billion. Then the next, 16th and 17th round of sanctions were introduced which burdened the economic situation in the country even further. In particular, they have led to a reduction in foreign trade and investment and to the stopping of large scale investment projects.
Considerable damage to industrial facilities was caused by being sabotaged by rebels who have repeatedly damaged oil and gas pipelines, electric power facilities and railway tracks along which fuel tanks were transported. The work of one of the country's largest refineries in Homs was virtually paralysed, and a cotton factory burnt, where the fire destroyed 260 tons of raw materials.
As of late July the authorities assessed the damage caused by fighting to the economy and infrastructure of the country as standing at $11 billion - nearly $647 million per month. And from the foreign exchange reserves, the volume of which before the Syrian confrontation was $18 billion, only half remains.
Losses: Syria suffers only losses. No matter who heads Syria after the war, the country's economy will need a long recovery period.
Besides time, huge funds will be required. As opposed to Libya which has managed to restore the pre-conflict oil output by 1.6 million barrels a day and expects revenue from the oil supply abroad to the amount of $50 billion, Syria is not a major oil producer. The country produced only 0.4 million barrels of oil a day and received about $4 billion a year from exports.
Foreign tourism, a key area in the country's revenues has suffered losses. It will be hard to return to the former glory of being a tourist country and to restore the greatly damaged agricultural sector. Moreover, the Syrian economy in 2009 showed a decline by 1.8 per cent, despite recent governmental economic reforms. These reforms aim at reducing interest rates for loans, opening private banks, consolidating all exchange rates, raising prices on certain subsidized goods, especially petrol and cement. Such old economic problems as high unemployment along with a rapid population growth, the budget deficit, the reduction of water resources due to their intensive use in agriculture remained unresolved.
This means that devastated Syria will fail to restore its economy independently. It will completely dependent upon international aid. However, this source can also fail. According to the example of some countries that have survived the 'Arab Spring', foreign countries which promised to help Egypt in a hard and unstable period, did not in fact do this. After Gaddafi's regime fell, all foreign allies left Libya, but the countries that will assist Syria, will demand their interests, often running counter to their own interests, to be observed.
There is hope remaining for the International Monetary Fund, the World Bank or other financial institutions. However this form of assistance which would be able to stabilise the domestic economy for a certain period, will burden the country's external debt as a credit debt.
Investments in Petkim to increase to $500 million
The portfolio of investments in the Turkish petrochemical complex Petkim, in which SOCAR has an equity interest, will be increased to $500 million by 2015, SOCAR Turkey energy head and board member of the Petkim petrochemical complex Kenan Yavuz said in an interview with the Turkish edition of Para Dergisi.
"At present, the volume of investments in Petkim is $250 million," he said. "The capacity of the complex was increased by 10 per cent through these investments. It is planned to invest $ 250 million more in Petkim till 2015."
He also stressed that around $300 million more will be invested in the construction of a new container port in the area of the Petkim complex. These funds are not included in the indicated package of investments.
On March 30, SOCAR Turkey Enerji A.S and SOCAR International DMCC OGG acquired a 10.32 per cent stake in Petkim, increasing SOCAR's stake in the company to 61.32 per cent. Some 38.67 per cent are in free circulation at the Istanbul Stock Exchange. Petkim Petrokimya Holding manufactures plastic packages, fabric, PVC, detergents, being the only Turkish producer of such products, a quarter of which the company exports.
SOCAR plans to buy some shares in Turkish gas distribution network
SOCAR plans to acquire some shares in Istanbul's gas distribution network İGDAS, SOCAR Turkey Energy head, and board member of the Petkim petrochemical complex Kenan Yavuz said in an interview with the Turkish edition Para Dergisi.
"Last year the company based on the İGDAS acquisition was founded," he said. "We also have partners in the İGDAS privatisation."
He added that SOCAR intends to offer a reasonable price to purchase a part of the gas distribution network.
The tender for selling 90 per cent of İGDAS shares, planned to be held in May 2012, was postponed for an uncertain period. Foreign and local companies are allowed to participate in the tender.
SOCAR is the only producer of oil products in the country (it has two refineries on its balance sheet) and also owns petrol stations in Azerbaijan, Georgia, Ukraine and Romania. SOCAR possesses a network of petrol stations in Switzerland and is the co-owner of the largest Turkish petrochemical complex Petkim.
SOCAR Turkey Energy: Azerbaijani gas supplies to Turkey are cheapest and stable
The cheapest and stable gas supplies to Turkey come from Azerbaijan, SOCAR Turkey Energy head and board member of the Petkim petrochemical complex Kenan Yavuz said in an interview with the Turkish edition of Para Dergisi.
"At present, 1,000 cubic meters of gas from Iran costs Turkey $500," he said. "Gas from Russia is cheaper than Iranian by 30 per cent, while Azerbaijani gas by 40 per cent."
He added that after the TANAP project (Transanatolia gas pipeline) is implemented, Turkey will receive six billion cubic meters of gas from Azerbaijan. If necessary, the importation of gas from Azerbaijan to Turkey will be increased.
At present, Turkey receives gas from the Azerbaijani gas condensate field 'Shah Deniz' through the South Caucasus gas pipeline (Baku-Tbilisi-Erzurum). According to the contract, Turkey must receive 6.6 billion cubic meters of gas within the first stage of the field development. Turkey will receive six more billion cubic meters of gas from the second stage.
Previously the cost of gas for Turkey was $120 per 1000 cubic meters. However later, the price of Azerbaijani gas also increased after the cost of fuel rose on the world market.
Total reserves of 'Shah Deniz' field are estimated at 1.2 trillion cubic meters of gas. The contract to develop the offshore Shah Deniz field was signed on June 4, 1996. Participants to the agreement are: BP (operator) - 25.5 per cent, Statoil - 25.5 per cent, NICO - 10 per cent, Total - 10 per cent, LukAgip - 10 per cent, TPAO - nine per cent and SOCAR-10 per cent.