Syria: New EU Sanctions Won't Harm Us

Syrian foreign minister says his country will sell oil to Russia and China in wake of EU oil import ban.

Syria plans to sell the oil European customers cannot take under a new EU import ban to
Russia or China and will be unharmed by western sanctions as long as its own energy needs are met, Syria's finance minister said on Wednesday.

The European Union, which buys nearly all Syria's exported oil, has banned Syrian oil imports to pressure President Bashar Assad to end his violent crackdown on anti-government protests but still allows fuel sales to Syria.

Assad - AP file photo - released 31.7.11

"The sanctions will not hurt Syria, Syria will remain standing on its own two feet... There is no problem as long as our local needs are secure," Syrian Finance Minister Mohammad al-Jleilati told Reuters in Abu Dhabi.

The EU stopped short of banning all trade between European energy companies and Syria because Brussels did not want to increase the suffering of the Syrian people by cutting off fuel needed for power generation.

But Syria is now looking for new buyers for the 110,000-150,000 barrels a day (bpd) of crude it typically exports - 99 percent of it to Europe - and hopes the world's biggest oil producer, Russia and major importer China will buy some of it.

"We will either refine it ... or sell it directly to Russia, China or any country that accepts to buy our extra oil," Jleilati said.

"Otherwise we will keep it as reserves," he added, without explaining whether that meant shutting down production from Syria's oil fields or pump into storage sites.

The International Energy Agency estimates Syria produced around 370,000 bpd of oil in July, while monthly Syrian crude loading programs pegged exports at 150,000 bpd - worth nearly $16 million a day at current prices.

According to the U.S. Energy Information Administration (EIA), Syria can refine up to 240,000 bpd, so it does not have anywhere near enough spare capacity to process all the crude it has been selling to Europe until now.

So it will have to slash crude production unless it can find buyers for its heavy crude and neither China nor Russia seem likely to want it unless offered at a big discount.

"The size of Syrian oil exports is relatively small... so it's not very convenient to load and transport Syrian crude to China," said a trader at Chinese state oil company.

"I can't see any demand for Syrian crude in the near term... But if Syrian crude is cheap enough, I won't rule out the possibility of buying it in the future."

Russia, as the world's second largest crude exporter, is even less likely to buy Syrian crude.

"I think Russia won't spoil relations with Europe or the United States because of that," a trader at a Western trading house in Moscow said.