JPMorgan Backs Syria's First Letter of Credit in 14 Years for Saudi Fuel

JPMorgan coordinated the arrangement that allowed Syria to open its first letter of credit in 14 years, a step that lets the country buy petroleum products from Saudi Aramco through ordinary banking channels.

Mohammad Qawja, executive director of financial affairs at the Syrian Petroleum Company, said the US bank's task was to confirm the credit once issued and guarantee it would be honoured. JPMorgan declined to comment.

The Central Bank of Syria said on October 11 that it had processed the first documentary credit for SPC, arranged with a major US bank, to import petroleum products from Aramco. The central bank described the transaction as the first of its kind in 14 years.

A cargo at Baniyas

The Baniyas oil terminal took delivery of its first diesel shipment from Aramco on Monday. The cargo carried more than 63,780 metric tons and was the first under an agreement between Syria and the Saudi company.

Jamil Wahoud, who heads tanker berthing and pilotage at SPC, said the delivery formed part of efforts to secure petroleum products for the domestic market. He called it a trial run meant to build cooperation with Aramco, and said it followed the processing of the first documentary credit for petroleum product imports through the central bank.

That mechanism, Wahoud said, gives the transaction an official banking channel and could open the door to wider cooperation.

Qawja said he expected later shipments to extend to gasoline and, eventually, light crude oil.

Why the credit matters

The transaction is a test of whether Syria can trade through formal international banking channels after years of leaning on alternative payment routes. A letter of credit requires a bank on each side willing to accept the counterparty risk, and for a country cut off from much of the global financial system for more than a decade, getting one confirmed by a US institution is the difficult part. Fuel supply is the immediate concern; the precedent is the longer one. If the arrangement holds and expands to other products, it gives Syrian state companies a route to pay foreign suppliers without working around the banking system.

Aramco began diesel exports to Syria in the week the details emerged.