EU plans to impose oil embargo on Syria 'next week'

The European Union adopted sanctions against 15 more Syrian individuals and five businesses, and said a promised oil embargo on the Middle Eastern country could be in place next week.

“The whole process could be completed by the end of next week if all goes according to plan,” said an EU diplomat, referring to discussions over the imposition of the embargo.

The diplomat said there is uncertainty about the exact scope of the new criteria, with discussions apparently hampered by concerns over how to structure the EU sanctions without risking legal challenges by their targets.

Industry sources said an oil embargo would mark a major step for the EU, where several governments have been reluctant to target Syria’s oil industry due to concerns over potential damage to their commercial interests.

Sanctions imposed by Washington have excluded US companies from participating in Syria’s oil and gas industry, but Damascus has been working with European companies such as Royal Dutch Shell PLC and Total SA, along with Chinese and Indian firms.

The main foreign producing consortium in Syria is the Al-Furat Petroleum Co., a joint venture of Syria's General Petroleum Corp. 50%, Shell Oil 29.7%, and China National Petroleum Corp. 20.3%.

According to the US Energy Information Administration, Syria's net petroleum exports were estimated to be 109,000 b/d in 2010, down slightly from the 117,000 b/d exported in 2009.

Around 95% of Syria’s oil exports go to EU countries, with the main buyers by percentage being Germany 32%, Italy 31%, France 11%, the Netherlands 9%, Austria 7% and Spain 5%.

The EIA said Syria exports two main grades of crude: its main export grade the low-quality, high-sulfur Souedieh known as Syrian heavy, and the high-quality, low-sulfur Syrian light.

Heavy crude oil accounts for about 75% of Syria's oil exports, with Souedieh produced by SPC. Syrian Light is a blend of production from the Shell-led AFPC venture, and smaller amounts from Total’s venture at Deir ez-Zor.

The EU’s planned move comes after the US government last week imposed sweeping sanctions against Syria, prohibiting US companies from importing or exporting crude or oil products to and from the country (OGJ Online, Aug. 18, 2011).

Ahead of the EU’s planned embargo, industry sources said that the world’s largest oil traders and companies—such as Vitol, Trafigura, Total, and Shell—are voluntarily ending their trade links with Syria.

One oil trader said that his firm is not participating in new tenders of deals, while another claimed that his firm had recently stopped dealing with the Syrians due to the planned imposition of EU sanctions.

Earlier this year, Syria announced a bidding round for the development of oil shale deposits in al-Khanasir, southeast of Aleppo. The area for bid is comprised of 14 blocks, with total shale oil deposits estimated at 285 billion bbl. The submission of bids is due by Nov. 30.

Contact Eric Watkins at hippalus@yahoo.com.

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