Suncor Energy Inc. has pulled back from its operations in Syria, amid escalating turmoil and political sanctions in the violence-torn country.
The company, which employs just over 100 foreign and national workers in the country, expects to extract expatriate staff in the coming few days. It will continue to pay Syrian employees, but has told them to halt work at its operations there. The withdrawal follows similar moves by several other major energy producers, including Royal Dutch Shell PLC and France’s Total SA, and was welcomed by a Syrian opposition leader.
Though Suncor faced calls to stay in the country, since its natural gas fuels vital electricity generation, the company runs its Syrian operations from Europe, and was obliged to comply with tightening EU sanctions.
But the problems in Syria illustrate the challenge Canadian companies face in working abroad, where the temptation of robust profits must often be balanced against increased political risk.
For Suncor in particular, the Syria withdrawal marks the second time it has had to abandon foreign operations in 2011, after it left Libya earlier this year. It also follows years of questions over whether the company was wise to hold on to its Syrian and Libyan assets, which it acquired through its takeover of Petro-Canada.
Only months after the takeover was announced, outgoing chief executive officer Rick George said he had personally visited Syria, and decided not to sell operations there. At the time he said of Syria: “That asset looks actually quite strong to me.”
That view strengthened with time. Last July, Mr. George told investors he had attended the opening of the company’s gas plant in Syria, which he called a “highlight” and “a great success story for us.”
This February, he spoke about Libya and Syria, saying he was “delighted to tell you that in both countries, operations are normal and that we see no disruptions of the type that we’re currently seeing on TV in Egypt.” The company bid on new exploration licences, and had conducted drilling to expand its production.
By May, Mr. George had acknowledged the unrest, but told investors the company was well-located in the country, away from populated centres. And because Syria was short on natural gas and electricity, he said, “I would say I think it’s in everybody’s interest, virtually everybody, that we keep that facility up and running.”
Now, it’s unclear whether Suncor can hold on to its Syrian operations – especially as some oilfield facilities, including an important pipeline, have come under attack. The company said it was too early to discuss a potential writedown.
Still, it’s possible Suncor will gain from holding on in Syria, at least in the long term. In Libya, for example, Suncor joint venture company, Harouge Oil Operations, said earlier this fall that it expected to return to full operations by year-end. Suncor has yet to station foreign staff back in Libya, although its employees have been flying to Tripoli for meetings. But the interruption to operations was relatively brief.
And analysts say the same could happen in Syria, where energy accounts for some 30 per cent of the country’s revenues. That income will be important for rebuilding, if the country’s dictatorship is ended.
“It’s going to be essential to get this [energy infrastructure]back online as quickly as possible after the regime is toppled,” said David Schenker, director of the program on Arab politics at the Washington Institute for Near East Policy.
For now, it’s not clear how much the Suncor withdrawal will affect output from its Syrian operations, which are run by a separate joint venture company that can continue pumping oil and gas. The joint venture will, however, will lose some of the staff Suncor had seconded.
Hassan Hachimi, a member of the opposition Syrian National Council who is heading foreign relations with North America, said companies have done right by pulling out. He said interrupting energy production will “gradually paralyze the regime and put more pressure on them.”
With oil production, in particular, an EU ban on imports from Syria is expected to have a significant effect, given that Germany, Italy, France and the Netherlands refine the majority of its 109,000 daily export barrels. Syria’s ability to export to other places that want its crude, like India, has been diminished by its inability to accommodate very large tankers at its export terminals.Report Typo/Error