Tag Archives: fuel

Russian tankers fueled North Korea via transfers at sea

A North Korean flag flies on a mast at the Permanent Mission of North Korea in Geneva October 2, 2014.

By Guy Faulconbridge, Jonathan Saul and Polina Nikolskaya

LONDON/MOSCOW (Reuters) – Russian tankers have supplied fuel to North Korea on at least three occasions in recent months by transferring cargoes at sea, according to two senior Western European security sources, providing an economic lifeline to the secretive Communist state.

The sales of oil or oil products from Russia, the world’s second biggest oil exporter and a veto-wielding member of the United Nations Security Council, breach U.N. sanctions, the security sources said.

The transfers in October and November indicate that smuggling from Russia to North Korea has evolved to loading cargoes at sea since Reuters reported in September that North Korean ships were sailing directly from Russia to their homeland.

“The Russian vessels made transfers at sea to the North Koreans,” the first security source, who spoke on condition of anonymity, told Reuters. The source said the transfers of oil or oil products took place on several occasions and were a breach of sanctions.

A second source, who independently confirmed the existence of the Russian ship-to-ship fuel trade with North Korea, said there was no evidence of Russian state involvement in the latest transfers.

“There is no evidence that this is backed by the Russian state but these Russian vessels are giving a lifeline to the North Koreans,” the second European security source said.

In comments carried by Russia’s RIA Novosti state news agency on Saturday, the Russian Foreign Ministry said the country was observing sanctions against North Korea.

The two security sources cited naval intelligence and satellite imagery of the vessels operating out of Russian Far Eastern ports on the Pacific but declined to disclose further details to Reuters, saying it was classified.

The Russian Customs Service declined to comment when asked on Wednesday if Russian ships had supplied fuel to North Korean vessels. The owner of one ship accused of smuggling oil to North Korea denied any such activity.

SATELLITE DATA

The U.S. State Department, in a statement, called on Russia and other U.N. members to “strictly implement” sanctions on North Korea and to work “more closely together to shut down U.N.-prohibited activities, including ship-to-ship transfers of refined petroleum and the transport of coal from North Korea”.

The latest report came as China, responding on Friday to criticism from U.S. President Donald Trump, denied it had illicitly shipped oil products to North Korea.

North Korea relies on imported fuel to keep its struggling economy functioning. It also requires oil for its intercontinental ballistic missile and nuclear program that the United States says threatens the peace in Asia.

“The vessels are smuggling Russian fuel from Russian Far Eastern ports to North Korea,” said the first security source, who spoke on condition of anonymity.

Reuters was unable to independently verify that the vessels had transferred fuel to North Korean vessels, whether the Russian state knew about the sales or how many Russian vessels were involved in the transfers. It was also unclear how much fuel may have been smuggled.

Ship satellite positioning data consulted by Reuters and available on Reuters Eikon shows unusual movements by some of the Russian vessels named by the security sources including switching off the transponders which give a precise location.

The security sources said the Russian-flagged tanker Vityaz was one vessel that had transferred fuel to North Korean vessels.

The Vityaz left the port of Slavyanka near Vladivostok in Russia on Oct. 15 with 1,600 tonnes of oil, according to Russian port control documents.

Documents submitted by the vessel’s agent to the Russian State Port Control authority showed its destination as a fishing fleet in the Japan Sea. Shipping data showed the vessel switched off its transponder for a few days as it sailed into open waters.

According to the European security sources, the Vityaz conducted a ship-to-ship transfer with the North Korean Flagged Sam Ma 2 tanker in open seas during October.

Reuters could not independently verify the transfer as ship tracking data showed that the Sam Ma 2 had turned off its transponder from the start of August.

The owner of the Russian vessel denied any contact with North Korean vessels but also said it was unaware that the vessel was fuelling fishing boats.

OIL PRODUCTS

Yaroslav Guk, deputy director of the tanker’s owner, Vladivostok-based Alisa Ltd, said the vessel had no contacts with North Korean vessels.

“Absolutely no, this is very dangerous,” Guk told Reuters by telephone. “It would be complete madness.”

When contacted a second time, Guk said the vessel did not have any contacts with North Korean ships and that he would not answer further questions.

An official at East Coast Ltd, the vessel’s transport agent, declined to comment.

Two other Russian flagged tankers made similar journeys between the middle of October and November, leaving from the ports of Slavyanka and Nakhodka into open seas where they switched off their transponders, shipping data showed.

In September, Reuters reported that at least eight North Korean ships that left Russia loaded with fuel this year headed for their homeland despite declaring other destinations, a ploy that U.S. officials say is often used to undermine sanctions.

A Russian shipping source with knowledge of Far Eastern marine practices said North Korean vessels had stopped loading fuel in Russia’s Far Eastern ports but that fuel is delivered at sea by tankers using ship-to-ship transfers, or even by fishing vessels.

China on Friday denied reports it had been illicitly selling oil products to North Korea in violation of U.N. sanctions, after U.S. President Donald Trump said he was unhappy that China had allowed oil to reach the isolated nation.

China’s denial came a day after it blocked a U.S. effort at the United Nations to blacklist six ships Washington believes had engaged in illicit trade with North Korea, a U.N. Security Council diplomat said.

According to documents seen by Reuters this month, the United States had proposed that the U.N. Security Council blacklist 10 ships for illicit trade with North Korea.

It accused the vessels of “conducting illegal ship-to-ship transfers of refined petroleum products to North Korean vessels or illegally transporting North Korean coal to other countries for exports.”

Three North Korean ships among the 10 were blacklisted, along with a Panama-registered vessel.

(Additional reporting by David Brunnstrom in Washington, and Gabrielle Tetrault-Farber in Moscow; Editing by Giles Elgood, Leslie Adler and Alison Williams)

Yemen set to run out of fuel and vaccine in a month: UNICEF

A boy is being treated at a malnutrition treatment center in Sanaa, Yemen November 4, 2017.

GENEVA (Reuters) – Yemen’s stocks of fuel and vaccines will run out in a month unless a Saudi-led military coalition allows aid into the blockaded port of Hodeidah and Sanaa airport, UNICEF’s representative in the country said on Friday.

Meritxell Relano, speaking by phone to reporters in Geneva, said fuel prices had risen 60 percent and there were urgent concerns about a diphtheria outbreak, as well as food shortages because of the port closure.

“The situation that was already catastrophic is just getting worse,” she said. “The impact of this is unimaginable in terms of health and diseases.”

After two years of civil war, Yemen has 7 million people on the brink of famine and has had 900,000 suspected cholera cases in the past six months.

The number of new cases has fallen consistently for the past eight weeks, according to data from the World Health Organization.

But progress against cholera, which has killed 2,196 people, could be reversed by the blockade, WHO spokeswoman Fadela Chaib told a regular U.N. briefing in Geneva.

“If the closure is not stopped in the coming days, we may see that the progress is stopped,” Chaib said. “We can see even more cases and more deaths as a result of not being able to get access to people.”

The closure of Hodeidah port prevented a ship setting sail from Djibouti with 250 tonnes of WHO medical supplies on Wednesday. Trauma kits in particular are running short.

“If the hostilities continue and the ports remain closed, we will not be able to perform life-saving surgeries or provide basic healthcare,” Chaib said.

 

(Reporting by Tom Miles; Editing by Andrew Roche)

 

Convoy rolls into Damascus suburbs with aid for 40,000

Smoke rises at a damaged site in Ain Tarma, eastern Damascus suburb of Ghouta, Syria, September 14, 2017.

GENEVA (Reuters) – A convoy from the United Nations and Syrian Arab Red Crescent entered towns in the besieged Damascus suburb of eastern Ghouta on Monday, bringing aid to 40,000 people for the first time since June 2016, the United Nations said.

A tightening siege by government forces has pushed people to the verge of famine in the eastern suburbs, residents and aid workers said last week, bringing desperation to the only major rebel enclave near the Syrian capital.

The U.N. Office for the Coordination of Humanitarian Affairs (OCHA) said on Twitter they had entered the towns of Kafra Batna and Saqba.

The Syrian Arab Red Crescent said in a separate tweet that the inter-agency convoy had 49 trucks.

They carried food, nutrition and health items for 40,000 people in need, OCHA spokesman Jens Laerke said. “The last time we reached these two locations were in June 2016,” he said.

A health worker in Saqba who was present when the convoy started to offload said that nine trucks of foodstuffs, including milk and peanut butter, and four trucks of medicines had arrived so far.

Technical specialists were on board to assess needs in the towns in order to plan a further humanitarian response, he said.

“More aid to complement today’s delivery is planned in the coming days,” Laerke added.

At least 1,200 children in eastern Ghouta suffer from malnutrition, with 1,500 others at risk, a spokeswoman for the U.N. children’s agency UNICEF said last week.

Bettina Luescher, spokeswoman of the U.N. World Food Programme (WFP), said the convoy carried nutrition supplies for 16,000 children.

Food, fuel and medicine once travelled across frontlines into the suburbs through a network of underground tunnels. But early this year, an army offensive nearby cut smuggling routes that provided a lifeline for around 300,000 people in the enclave east of the capital.

 

(Reporting by Stephanie Nebehay; Additional reporting by Ellen Francis in Beirut; Editing by Alison Williams and Peter Graff)

 

Exclusive: From Russia with fuel – North Korean ships may be undermining sanctions

Exclusive: From Russia with fuel - North Korean ships may be undermining sanctions

By Polina Nikolskaya

MOSCOW (Reuters) – At least eight North Korean ships that left Russia with a cargo of fuel this year headed for their homeland despite declaring other destinations, a ploy that U.S. officials say is often used to undermine sanctions.

Reuters has no evidence of wrongdoing by the vessels, whose movements were recorded in Reuters ship-tracking data. Changing a ship’s destination once underway is not forbidden and it is unclear whether any of the ships unloaded fuel in North Korea.

But U.S. officials say that changing destination mid-voyage is a hallmark of North Korean state tactics to circumvent the international trade sanctions imposed over Pyongyang’s nuclear weapons program.

Changing course and the complex chain of different firms –many offshore — involved in shipments can complicate efforts to check how much fuel is supplied to North Korea and monitor compliance with a cap on fuel imports under U.N. sanctions.

“As part of North Korea’s efforts to acquire revenue, the regime uses shipping networks to import and export goods,” U.S. Assistant Secretary of the Treasury Marshall S. Billingslea told the Congressional Foreign Affairs Committee this month.

“North Korea employs deceptive practices to conceal the true origins of these goods. Pyongyang has been found to routinely falsify a vessel’s identity and documentation.”

VOYAGE OF THE MA DU SAN

The eight vessels identified in the tracking data set sail from the Far Eastern Russian port of Vladivostok or nearby Nakhodka and registered China or South Korea as their destination with the Information System for State Port Control.

After leaving Russia, they were next recorded off the North Korean ports of Kimchaek, Chongjin, Hungnam or Najin. None went on to China and most went back to Russia.

All had a cargo of diesel, a source at the company that services vessels in Vladivostok said. Their cargo capacity ranged from 500 tonnes to 2,000 tonnes.

One of the vessels was the Ma Du San, owned by North Korea’s Korea Kyongun Shipping Co. It took on a cargo of 545 tonnes of marine fuel at Vladivostok’s Pervaya Rechka terminal, owned by Russia’s Independent Petroleum company (IPC).

Reuters obtained a bill of lading — a receipt for goods issued when a ship loads up — dated May 19 showing the Ma Du San’s cargo came from Khabarovskiy NPZ, a refinery owned by IPC.

The ship set sail on May 20. Documents filed with Russia’s Information System for State Port Control stated its next destination as the Chinese port of Zhanjiang and the bill of lading showed it as Busan in South Korea.

The Ma Du San’s next recorded location after Vladivostok was inside the perimeter of the port of Kimchaek — all the other ships were tracked only in the vicinity of ports. North Korean ships intermittently turn off their transponders, and satellites cannot track them at such times, U.S. officials say.

Allegations outlined in two U.S. Treasury Department sanctions orders and a legal complaint filed by the U.S. government match the information Reuters obtained on the Ma Du San though the U.S. documents do not name the vessel involved.

SANCTIONS BLACKLIST

On June 1, the U.S. Treasury Department included IPC on its sanctions blacklist, saying it provided oil to North Korea and may have been involved in circumventing sanctions.

On Aug. 22, the U.S. government sanctioned two more companies, both registered in Singapore — Transatlantic Partners and Velmur Management Pte. Ltd.

The legal complaint, also filed on Aug. 22, accused the two firms of money laundering on behalf of sanctioned North Korean banks seeking to buy petroleum products, citing a bill of lading for May 19 for a cargo of diesel sold by IPC to Velmur and loaded in Vladivostok — the same date as the bill of lading for the Ma Du San.

Andrey Serbin, who represents Transatlantic Partners, said the firm had not received payments from a sanctions-hit bank and that ownership of the fuel changed after it was loaded.

“We sold the fuel to a Chinese company,” Serbin, who has been blacklisted by the U.S. government for “operating in the energy industry in the North Korean economy” and working to purchase fuel for delivery to North Korea, said of several shipments where the company acted as middleman.

“There’s no way we can control them (the goods),” he said.

Serbin did not identify the vessels Transatlantic Partners loaded fuel on to, but a source in a company that services ships in Vladivostok said the Ma Du San was among them.

The bill of lading named the recipient of the Ma Du San’s cargo as a company called LLC Sky Shipping Limited. Reuters was unable to find any record of such a firm.

Velmur said it could not have known where the cargo would end up and did not knowingly help anyone dodge sanctions.

IPC did not respond to a request for comment. Its parent company, Bermuda-registered Alliance Oil Company Ltd., denied having any contractual relations with North Korean companies when U.S. sanctions were imposed on IPC.

The U.S. Treasury and State departments declined to answer questions about Reuters’ findings.

Russia’s foreign ministry did not respond to questions about fuel exports to North Korea but has said Russia complies with the sanctions. Russia’s customs service said it could not provide information about movement of goods across borders.

Since the U.S. sanctions were imposed on IPC, all North Korean-flagged vessels that had been in Vladivostok port have left, according to the tracking data.

They departed with no cargo, an employee with a shipping agent in Vladivostok said. This is confirmed by documents seen by Reuters.

Russian supplies of oil and oil products to North Korea are much smaller than volumes shipped by China, Pyongyang’s only major ally. Beijing has acted to reduce the flows, but Russia’s trade in all goods with North Korea more than doubled in the first quarter of 2017 to $31.4 million.

Moscow’s trade with Pyongyang is under closer scrutiny following a series of missile launches by North Korea and a test involving what it said was a hydrogen bomb.

(Additional reporting by David Brunnstrom in WASHINGTON, Chen Aizhu in BEIJING, James Pearson in SEOUL, Katya Golubkova, Gleb Stolyarov, Vladimir Soldatkin and Olesya Astakhova in MOSCOW; Editing by Christian Lowe and Timothy Heritage)

Texas edges closer to recovery after Harvey as key pipeline restarts

Samaritans help clear debris from the house of a neighbor which was left flooded from Tropical Storm Harvey in Houston, Texas, U.S. September 3, 2017.

By Catherine Ngai

HOUSTON (Reuters) – The U.S. Gulf Coast moves closer to recovery from Hurricane Harvey on Monday when the biggest American fuel system restarts a key segment shut down by devastating rains and officials weigh how to pay for billions of dollars in damage.

The move by Colonial Pipeline to resume transporting distillates such as diesel fuel comes as the Gulf region’s energy industry starts to come back online.

Flooding from Harvey drove up fuel prices by shutting down almost a quarter of U.S. refining capacity.

The storm came ashore on Aug. 25 as the most powerful hurricane to hit Texas in more than 50 years. It killed an estimated 50 people, displaced more than 1 million and damaged some 200,000 homes in a path of destruction stretching for more than 300 miles (480 km).

Colonial said it expected to reopen a Texas section of its network from Houston to Hebert, Texas, on Monday, which is the Labor Day holiday. The line would be ready to start moving gasoline on Tuesday, it said.

The pipelines’ reopening will restore links between refineries along the Gulf Coast, the U.S. petrochemical hub, to markets in the Northeast.

Another fuel system, Explorer Pipeline, said a link running from Texas to Oklahoma restarted on Sunday, with a second pipeline from Oklahoma into the Midwest expected to resume on Monday.

Retail fuel costs surged through the weekend amid fears of shortages, despite the restart of several key Gulf refineries that had been crippled by Harvey.

Treasury Secretary Steven Mnuchin challenged Congress on Sunday to raise the government’s debt limit in order to free up relief spending. Texas Governor Greg Abbott said the storm had caused up to $180 billion in damage.

President Donald Trump’s administration has asked Congress for an initial $7.85 billion for recovery efforts, a small fraction of what will eventually be needed.

Even that amount could be delayed unless Congress quickly increases the government’s debt ceiling, Mnuchin said. The United States is on track to hit its mandated borrowing limit by the end of the month unless Congress increases it.

Houston Mayor Sylvester Turner said the city expected most public services and businesses to be restored by Tuesday, the first day after the Labor Day holiday.

About 37,000 families were staying in 270 shelters in Texas, the highest number reported by the American Red Cross.

The city mandated the evacuation of thousands of people on the western side of Houston on Sunday to accommodate the release of water from reservoirs that otherwise might sustain damage. The storm stalled over Houston, the fourth-largest U.S. city, dumping more than 50 inches (1.3 m) on the region.

 

(Reporting by Catherine Ngai in HOUSTON and Ian Simpson in WASHINGTON; Editing by Paul Tait)

 

Exclusive: China’s CNPC suspends fuel sales to North Korea as risks mount – sources

FILE PHOTO: PetroChina's logo is seen at its petrol station in Beijing, China, March 21, 2016. Picture taken March 21, 2016. REUTERS/Kim Kyung-Hoon/File Photo

By Chen Aizhu

BEIJING (Reuters) – China National Petroleum Corp has suspended sales of fuel to North Korea over concerns the state-owned oil company won’t get paid, as pressure mounts on Pyongyang to rein in its nuclear and missile programmes, three sources told Reuters.

It’s unclear how long the suspension will last. A prolonged cut would threaten critical supplies of fuel and force North Korea to find alternatives to its main supplier of diesel and gasoline, as scrutiny of China’s close commercial ties with its increasingly isolated neighbour intensifies.

CNPC and the Ministry of Commerce did not respond to requests for comment. North Korea’s embassy in Beijing declined to comment.

Chinese foreign ministry spokesman Lu Kang, asked about the sale suspension and whether the Chinese government put pressure on CNPC to make this decision, said: “I do not understand this situation you are talking about” and declined to elaborate.

A source with direct knowledge of the matter said CNPC decided to put fuel sales on hold “over the last month or two” and described it as a “commercial decision”.

“It’s no longer worth the risks,” said the source. Chinese and international banks are stepping up compliance checks on companies dealing with countries on the U.S. sanctions list, such as North Korea, he said.

The North Korean agents who mostly buy the diesel and gasoline have been unable recently to pay for the supplies — CNPC normally requires upfront payments, the source said.

Reuters was unable to determine if the agents have started facing credit problems with Chinese and international banks worried about sanctions compliance issues.

Two other sources briefed about CNPC’s decision confirmed the suspension of diesel sales, but did not know directly about the gasoline move. The three people declined to be named due to the sensitivity of the matter and are not authorised to speak to the media.

PRICES SURGE IN NORTH

Last year, China shipped just over 96,000 tonnes of gasoline and almost 45,000 tonnes of diesel worth a combined $64 million to North Korea, where it is used across the economy from fishermen and farmers to truckers and the military.[O/CHINA4]

Most of that was sold by CNPC, which has grown over the past two decades to dominate China’s energy trade with Pyongyang.

Data for May released on Friday showed China supplied significantly lower volumes of diesel and gasoline compared with a month earlier, although monthly tonnages can vary widely. June data will be released in late July.

Fuel prices in North Korea, meanwhile, have sharply risen in recent months, suggesting a tightening in supply.

A Reuters analysis of data collected by Daily NK showed the price of gasoline sold by private dealers in Pyongyang and the northern border cities of Sinuiju and Hyesan had hit $1.46 per kg on June 21, up almost 50 percent from April 21. Until then, they had remained relatively stable since late last year.

Diesel prices averaged $1.20 per kg as of June 21, more than double over the same period, according to Daily NK, a website run by defectors who collect prices via phone calls with North Korean fuel traders.

U.S SCRUTINY

North Korea’s unprecedented pace of nuclear and ballistic missile tests has prompted China, which handles 90 percent of North Korea’s trade, to start squeezing Pyongyang.

In February, Beijing suspended coal purchases until the end of the year, cutting off North Korea’s main export revenue source. In 2016, North Korea sold 22.5 million tonnes of coal to China, worth about $1.9 billion, according to Chinese customs.

The United States has pressed China to exert more economic and diplomatic pressure on North Korea, but Beijing has said its influence on North Korea is limited and it is doing all it can.

President Donald Trump, frustrated over Beijing’s inaction on North Korea and bilateral trade issues, is now considering possible trade actions against China, three senior administration officials told Reuters on Tuesday.

The sources in China saw no sign yet that Beijing is cutting crude oil to Pyongyang. China has not disclosed its crude exports to North Korea for several years, but industry sources say it supplies via an aging pipeline about 520,000 tonnes of crude a year to North Korea, worth about $170 million at current market prices.

North Korea imports all its oil needs, mostly from China and a much smaller amount from Russia.

(Reporting by Chen Aizhu in BEIJING; additional reporting by Heekyong Yang; in SEOUL, Lusha Zhang and Ben Blanchard in BEIJING; Editing by Josephine Mason and Bill Tarrant)

With tunnel lifeline cut, pressure mounts on Syrian rebel enclave

Abu Malek, one of the survivors of a chemical attack in the Ghouta region of Damascus that took place in 2013, uses his crutches to walk along a street in the Ghouta town of Ain Tarma, Syria. REUTERS/Bassam Khabieh

By Ellen Francis

BEIRUT (Reuters) – For nearly four years, food, fuel and medicine have traveled across frontlines into the besieged eastern suburbs of Damascus through a network of underground tunnels.

But an army offensive near the Syrian capital has shut the routes into the rebel enclave of Eastern Ghouta, causing supplies to dwindle and prices to rocket, residents say.

“The price of fuel went up like crazy,” said Adnan, 30, the head of a local aid group that distributes food.

A cooking gas canister now costs 50,000 Syrian pounds, nearly four times its price before the attack and almost 20 times the state-regulated price in nearby Damascus.

Adnan, whose aid group buys rice, lentils and other goods that arrive via the tunnels, said the shutdown and steep price hikes had triggered rising despair in the suburbs.

As the army tightens the noose, fighters and civilians are bracing for a full-blown assault and bitter shortages that could last through the winter.

“The operation aims to strangle the Ghouta … by closing off the crossings and tunnels,” Hamza Birqdar, military spokesman for the Jaish al-Islam rebel group, told Reuters.

“Trade through the tunnels has completely stopped.”

Government forces have blockaded Eastern Ghouta, a densely populated pocket of satellite towns and farms, since 2013. It remains the only major rebel bastion near Damascus, though it has shrunk by almost half over the past year.

President Bashar al-Assad’s government has been steadily defeating pockets of armed rebellion near the capital, with the help of Russian air power and Iranian-backed militias.

It ultimately aims to seize the Ghouta, pushing fighters to accept state rule or leave for rebel territory in the north, in a type of negotiated withdrawal that has helped shore up its rule over Syria’s main urban centers.

TUNNEL CRACKDOWN

Heavy fighting and air strikes have rocked the districts that stand between Damascus and Eastern Ghouta, severing smuggling routes that provided a lifeline for around 300,000 people in the besieged suburbs.

The army assault entered a higher gear in recent months in the districts of Barzeh and Qaboun, at the capital’s eastern edges, which abruptly ended a local truce that had been in place with rebels there since 2014.

Their relative calm and location had turned them into a transit point where traders brought supplies from the capital and shuttled them underground into the opposition enclave. Government forces have now swept into most of the two districts.

The siege generated a black market economy and profiteers who traded across frontlines, says an activist who has smuggled medicine through one of the tunnels.

Goods prices were ramped up by payments to checkpoints in government-held areas and rebels that control the tunnels, the activist and other residents said.

Syrian officials were not available for comment on such allegations.

Syrian state media says Ghouta militants dug tunnels hundreds of meters long to move weapons and ambush army positions. The tunnels have been a target of army operations, with several blown up in recent months, it has said.

The wide array of rebels – including hardline jihadists and other groups supported by Turkey, the United States and Gulf monarchies – have been on the back-foot across Syria.

In Eastern Ghouta, a bout of renewed rebel infighting, after a rebel attack at the fringes of Damascus quickly fizzled out in March, could play into the government’s hands.

Birqdar said rebels faced “heavy shelling, air strikes, and incoming tanks” every day. “We must prepare for every scenario that could happen on the battlefield,” he said.

“We are fully ready to negotiate over stopping the bloodshed by the regime, but will not accept any talks that lead to surrender.” He ruled out a local evacuation deal.

The government says such deals have succeeded where U.N.-based peace talks failed. The opposition describes it as a strategy of forced displacement after years of siege – a method of warfare the United Nations has condemned as a war crime.

WHEN WINTER COMES

The U.N. has warned of impending starvation if aid does not reach Eastern Ghouta, where international deliveries have long been erratic and obstructed. A convoy that entered last week, for the first time in months, carried food and supplies for just about 10 percent of the estimated population.

“People have rushed to the markets to stock up,” said Adnan. “Because they have bitter memories of 2013,” when their towns first came under siege.

Merchants inside the Ghouta had filled up large warehouses that would last months, and residents would harvest crops in the area’s remaining farmland in the summer, he said. “Things will get worse when winter comes.”

The Wafideen crossing at the outskirts, where checkpoints allowed food to enter, has also been restricted since February, Adnan and others said.

One resident said rebel fighters also ran their own hidden routes through which they had moved unnoticed or smuggled arms.

Medics relied on the tunnels for antibiotics, anesthetics, and other supplies, said Abu Ibrahim Baker, a surgeon in Eastern Ghouta. Hospitals would be “able to hold out, God willing, but not for very long,” he said.

(Reporting by Ellen Francis; Editing by Tom Perry and Catherine Evans)

California would increase fuel taxes under $52 billion road repair plan

FILE PHOTO: Gasoline drips off a nozzle during refueling at a gas station in Altadena, California March 24, 2012. REUTERS/Mario Anzuoni

By Sharon Bernstein

SACRAMENTO, Calif. (Reuters) – California would increase gasoline taxes and other transportation-related fees for the first time in decades to fund an ambitious $52 billion plan to repair the state’s sagging infrastructure under a deal announced Wednesday.

The deal between fiscally moderate Democratic Governor Jerry Brown and leaders of the majority Democrat legislature would increase the excise tax on gasoline by 12 cents per gallon from the current $0.28, and on diesel fuel by 20 cents per gallon, among other fees, over 10 years to pay for repairs to roads and bridges as well as for anti-congestion projects.

“Let’s be clear – our roads suck,” said Assembly Speaker Anthony Rendon, who represents blue-collar suburbs south of Los Angeles at a news conference announcing the deal. “Our bridges are crumbling and traffic takes time away from our families. Delays cost businesses money.”

California’s transportation systems have languished unrepaired and unexpanded for decades, as budget constraints and politics have stymied plans by Democrats and Republicans alike.

Brown, a fiscal moderate credited with bringing the state back from a $27 billion budget gap, has refused to sign on to plans that involve borrowing money, and Republicans and some moderate Democrats have resisted raising gasoline taxes.

But the same Democratic wave that led California to go two-for-one in favor of former presidential candidate Hillary Clinton last November gave the party a two-thirds majority in both houses of the legislature, enough to pass new taxes without Republican support.

The deal won support of construction companies and labor unions, and Democratic lawmakers on Wednesday put up a unified front on what had been a divisive issue over raising taxes.

Under it, owners of electric vehicles would have to pay a $100 fee to help repair roads even though they don’t use gasoline and would not pay the gas tax. The fees and taxes would raise about $5.2 billion per year.

Republicans condemned the plan, saying transportation taxes and fees were already among the highest in the country.

“The transportation proposal announced by the Capitol Democrats is a costly and burdensome plan that forces ordinary Californians to bail out Sacramento for years of neglecting our roads,” Republican leaders said in a joint statement.

Their opposition means that if even a few moderate Democrats defect, the package could fail. Brown urged support.

“This is like fixing the roof on your house,” the governor said. “If you don’t fix the house, your furniture will be ruined. The rug will be destroyed. The wood will rot.”

(Reporting by Sharon Bernstein; Editing by James Dalgleish)

Exclusive: Venezuela increased fuel exports to allies even as supply crunch loomed

Venezuelan motorists line up for fuel at a gas station of Venezuelan state oil company PDVSA in Maturin, Venezuela March 23, 2017. REUTERS/Marco Bello

By Marianna Parraga and Alexandra Ulmer

HOUSTON/CARACAS (Reuters) – A gasoline shortage in OPEC member Venezuela was exacerbated by an increase in government-sanctioned fuel exports to foreign allies and an exodus of crucial personnel from state-run energy company PDVSA, according to internal PDVSA documents and sources familiar with its operations.

Leftist-run Venezuela sells its citizens the world’s cheapest gasoline. Fuel supplies have continued flowing despite a domestic oil industry in turmoil and a deepening economic crisis under President Nicolas Maduro that has left the South American country with scant supplies of many basic necessities.

That changed on Wednesday, when Venezuelans faced their first nationwide shortage of motor fuel since an explosion ripped through one of the world’s largest refineries five years ago. At the time, the government of then-President Hugo Chavez curbed exports to guarantee there was enough fuel at home.

This week’s shortage was also mainly due to problems at refineries, as a mix of plant glitches and maintenance cut fuel production in half.

Unlike five years ago, Caracas has continued exporting fuel to political allies and even raised the volume of shipments last month despite warnings within the government-run company that doing so could trigger a domestic supply crunch.

Shipments from refineries to the domestic market needed to be redirected to meet those export commitments, the internal documents showed.

“Should this additional volume … be exported, it would impact a cargo scheduled for the local market,” read one email sent from an official in the company’s domestic marketing department to its international trade unit.

Venezuela last month exported 88,000 barrels per day (bpd) of fuels – equivalent to a fifth of its domestic consumption – to Cuba, Nicaragua and other countries, according to internal PDVSA documents seen by Reuters.

That was up 22,000 bpd on the volumes Venezuela had been shipping to those two countries under accords struck by Chavez to expand his diplomatic clout by lowering their fuel costs through cheap supplies of crude and fuel.

The order to increase exports came from PDVSA’s top executives, according to the internal emails seen by Reuters.

Venezuela’s oil ministry and state-run PDVSA, formally known as Petroleos de Venezuela SA, did not reply to requests for comment for this story.

FUEL STRAIN, BRAIN DRAIN

The strain on the country’s fuel system has been worsened by the departure of staff in PDVSA’s trade and supply unit who are key to ensuring fuel gets to where it’s needed and making payments for imports, three sources close to the company said.

The unit has seen around a dozen key staffers depart since Maduro shook up PDVSA’s top management in January. Among those who left was the head of budget and payments, two sources said.

“Every week someone leaves for one reason or another,” said a PDVSA source familiar with the unit’s operations.

Some have been fired, while others have left since the shake-up inserted political and military officials into top positions and bolstered Maduro’s grip on the company that powers the nation’s economy.

The imposition of leaders with little or no experience in the industry has further disillusioned some of the company’s experienced professionals and accelerated an exodus that had already taken hold as economic and social conditions in Venezuela worsened.

A recent internal PDVSA report seen by Reuters mentioned “a low capacity to retain key personnel,” amid salaries of a few dozen dollars a month at the black market rate.

UNPAID BILLS

The departure of staff responsible for paying suppliers, as well as a cash crunch in the company and the country, have led to an accumulation of unpaid bills for fuel imports into Venezuela.

Had those bills been paid, the supply crunch would have been less acute, the company sources said.

About 10 tankers are waiting near PDVSA ports in Venezuela and the Caribbean to discharge fuel for domestic consumption and for oil blending.

Only one vessel bringing fuel imports has been discharged since the beginning of the week, shipping data showed.

PDVSA ordered some of the cargoes as it prepared alternative supplies while refineries undergo maintenance.

The tankers sitting offshore will not unload until PDVSA pays for their cargoes, said shippers and the company sources.

Should PDVSA pay – up to $20 million per cargo – shortages could blow over relatively soon.

The cash-strapped company has struggled since the global oil price crash that began in 2014 cut revenue for its crude exports. PDVSA is tight on cash as it prepares for some $2.5 billion in bond payments due next month.

While the vessels sit offshore, lines of dozens of cars waited at gas stations in central Venezuela on Wednesday and Thursday. The shortages angered Venezuelans who already face long lines for scarce food and drugs.

PDVSA blamed the supply crunch on unspecified problems for shipping fuel from domestic refineries to distribution centers. The company said it was working hard to solve the gasoline situation by boosting deliveries to the worst-hit regions.

A shortage of trucks to move refined products has also caused bottlenecks, oil workers told PDVSA President Eulogio Del Pino during a visit to a fuel facility this week, asking for help. Trucks are in short supply because the country does not have enough funds to pay for imports of spare parts.

It was unclear when fuel supplies would return to normal, although by late Thursday PDVSA appeared to have distributed some fuel from storage to Caracas and the eastern city of Puerto Ordaz. Lines to fill up at gasoline stations shortened in both cities, according to Reuters witnesses.

Workers at the 335,000-barrel-per-day Isla refinery on the nearby island of Curacao operated by PDVSA said on Friday that the refinery had begun restarting its catalytic cracking unit, which could boost fuel supplies in the coming days.

(Additional reporting by Mircely Guanipa in Punto Fijo and Maria Ramirez in Puerto Ordaz; Editing by Simon Webb and Jonathan Oatis)

Sudan to end fuel, food subsidies by 2019: minister

street vendor in Sudan

By Khalid Abdelaziz

KHARTOUM (Reuters) – Sudan plans to end all subsidies on food and fuel by 2019 and forecasts the lifting of U.S. sanctions will earn its hard currency-starved economy $4 billion per year in remittances, Minister of State for Finance Magdi Hassan Yasin said on Monday.

In the final days of Barack Obama’s presidency, Washington announced plans to lift a 20-year-old trade embargo, unfreeze assets and remove financial sanctions in response to Khartoum’s cooperation in fighting Islamic State and other groups.

The sanctions relief will come in six months if Sudan takes further steps to improve its human rights record and takes steps to resolve military conflicts, including in Darfur.

Even so, Sudanese officials are already looking beyond the sanctions regime.

“The lifting of American sanctions is a turning point for the Sudanese economy,” Yasin, a junior minister, said in an interview.

The path may not be smooth. On Saturday, Sudan’s foreign ministry called President Donald Trump’s temporary travel ban on citizens from seven countries, including Sudan, “very unfortunate”.

If there is no extension, the three-month restriction on Sudanese citizens entering the United States would be over by the time the trade embargo and financial sanctions are removed.

Even so, it is unclear if the tougher immigration rules promised by Trump might impact on trade relations between the two countries.

END OF SUBSIDIES

Sudan’s economy has struggled since South Sudan seceded in 2011, taking with it three-quarters of the country’s oil output and much of Khartoum’s foreign currency and government revenue.

Sudan in November cut fuel and electricity subsidies and announced import restrictions to save scarce foreign currency. Yasin said the government targets scrapping these subsidies entirely by 2019.

“Distortions will be removed from the economy with the total cancellation of consumption subsidies,” Yasin said. “That includes for fuel, electricity, and imported wheat.”

Yasin said the government was considering legislation allowing foreign companies to invest in electricity infrastructure and production for the first time. Huge swathes of rural Sudan have never been connected to the national grid.

“Sudan only produces 34 percent of its electricity needs, so the door will be open for investment in this field, especially after U.S. sanctions are lifted,” he said.

Khartoum has already said it will review its monetary and exchange rate policies once the U.S. sanctions are lifted to lure new foreign investment.

The potential for increased trade and investment flows is already reflecting in the real economy, with the Sudanese pound strengthening to 16 per dollar from 19 before the sanctions announcement.

The pound trades at 6.8 per dollar in the official banking system. The minister said a stronger pound would tame inflation, which hit an annual rate of 30.47 percent in December.

“We expect inflation to start declining beginning this July and for the value of the pound to continue rising with the inflow of remittances from Sudanese abroad and foreign investments,” said Yasin.

(Writing by Eric Knecht; Editing by Ahmed Aboulenein and Richard Lough)