EU to blacklist Syrian oil firm: diplomatic sources

LONDON/BRUSSELS Wed Nov 30, 2011 5:03pm EST

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LONDON/BRUSSELS (Reuters) - The European Union plans to add Syria's General Petroleum Corporation (GPC) to its list of sanctioned companies, diplomatic sources told Reuters on Wednesday, in a move designed to starve the government of President Bashar al-Assad of vital oil revenues.

World powers are imposing tough economic sanctions on the Syrian government over a violent crackdown on anti-government protests.

The diplomatic sources said Germany had reached a preliminary agreement with other EU powers to add state-owned GPC, along with several other Syrian firms, to its blacklist, ahead of a formal decision expected on Thursday.

GPC - already blacklisted by the U.S. Office of Foreign Assets Control - is responsible for supervising joint venture companies in Syria, according to its website.

Royal Dutch Shell and China National Petroleum Corporation are both partners of GPC through the Al-Furat joint venture. Shell declined to comment.

Some diplomatic sources said the move would likely make it difficult for European oil firms to continue operating in Syria.

"GPC would be designated which would force European companies that are there to declare force majeure. The idea is that this will give a fillip to the opposition," said one of the European diplomatic sources.

Syrian oil represents less than 1 percent of daily global production but accounts for a vital portion of Syrian government earnings.

The blacklisting of GPC would be part of a broader package of sanctions, set to be approved by EU foreign ministers at a meeting in Brussels on Thursday.

RISING PRESSURE

The heightened sanctions may be a reaction to evidence that Syria has resumed exporting crude oil again after an earlier bout of sanctions on European imports caused a temporary pause in oil flows.

Oil majors Shell and Total as well as the UK's Gulfsands have investments in Syria and have been forced to cut output in the country because of a lack of storage capacity for crude oil, sources told Reuters, but traders said that flows have increased in the last few weeks.

Hindustan Petroleum was looking to buy crude from sanctions-hit Syria and asked state-run Shipping Corp of India to arrange a vessel, sources familiar with the plan told Reuters.

In another sign that Syria is managing to sell its oil, a Liberian-flagged oil tanker was due to arrive in the port of Banias on November 18 before heading to the Middle East, shipping data showed.

The vessel's charterer was unknown.

Syria produced around 350,000 barrels per day (bpd) before the unrest of which about a third was exported, with most flows going to Europe.

(Additional reporting by Julien Toyer; Editing by Jon Boyle)

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