The European Union, which buys nearly all of Syria’s exported oil, has banned Syrian oil imports to pressure President Bashar Assad to end his violent crackdown on anti-government protests.
But the EU stopped short of banning all oil trade between European companies and Syria because Brussels did not want to increase the suffering of the Syrian people by cutting off fuel needed for power generation.
“Western countries won’t achieve what they were hoping in terms of controlling our economy ... Syria will remain standing on its own two feet,” Syrian Finance Minister Mohammad Al-Jleilati said in Abu Dhabi.
“There is no problem as long as our local needs are secure.”
Oil revenues are especially important for Syria as its tourism industry, which normally accounts for around 12 percent of the economy, has been hit hard by the violence that has spread across the country this year.
Syria is now searching for new buyers for around 150,000 barrels per 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,” Al-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 pumping it into storage sites.
Al-Jleilati said the government could withstand any Western pressure, and it would be the Syrian people who would suffer.
“Obviously the current conditions will have a negative effect on economic growth ... we expect 1 percent growth this year, and 3 to 4 percent growth the next year,” he said.
“The sanctions that were imposed do not hurt the Syrian government, but they have a negative impact on its citizens.”
The minister predicted an inflation rate of 4 to 5 percent this year and said the negative impact of sanctions would most likely be reflected in Syrian exports.
“No doubt there will be some negative effects. It may cause a drop of 20-25 percent,” he said, although analysts have predicted Syria’s trade has already fallen by 30-40 percent.
Al-Jleilati said Syria had $18 billion in reserves, which would allow the country to weather sanctions for up to five years.
“If not a single other dollar came, we could secure all our imports in full for two years ... if sanctions continued, our reserves could secure our needs for five years,” he said.
“This is not the first time we have faced sanctions, we coped with them before for years.”
The International Energy Agency estimates Syria produced around 370,000 bpd of oil in July, while Syrian crude exports are estimated at around 150,000 bpd — worth nearly $16 million a day at current prices.
According to the US Energy Information Administration (EIA), Syria’s net oil exports were just 109,000 bpd in 2010, because it also needs to import gas oil and diesel due to a lack of refining capacity to meet domestic demand.
Syria can only refine up to 240,000 bpd, according to the EIA, 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,” trader at a Western trading house in Moscow said.
