Venezuela to Continue Supplying Oil to Syria as Sanctions Widen

Venezuela said it will continue to ship fuel to Syria, even as Europe extended sanctions on the Middle East nation for using military force to quell civilian dissent against President Bashar al-Assad’s government.

“We have sent Syria two cargoes of diesel, and shipments will continue as they are needed,” Venezuela’s Oil Minister Rafael Ramirez said yesterday, without providing more details. “We have a high degree of friendship and cooperation with Syria, a country under siege.”

European Union governments tightened sanctions on Syria yesterday by freezing the assets of the country’s central bank and forbidding Syrian cargo-only flights. Last year, the U.S. imposed sanctions on Petroleos de Venezuela SA for delivering at least two cargoes of a gasoline additive to Iran between December 2010 and March 2011.

PDVSA isn’t prohibited from shipping oil to Syria under current sanctions, Ramirez, also the president of the state oil company, said in Caracas where he signed loans with China.

Syria, with a refining capacity of about 240,000 barrels a day, faces shortages of gasoil and diesel, according to the U.S. Energy Information Administration. The country had net petroleum exports of about 109,000 barrels a day in 2010, the EIA said. Diesel is typically shipped in oil-product tankers of as much as 159,000 deadweight tons.

The Syrian army has intensified attacks since a resolution supported by the Arab League aimed at installing a transitional government, to be followed by elections, was vetoed at the United Nations Security Council by Russia and China on Feb. 4.

Al-Assad’s government said yesterday that voters had backed a referendum designed to introduce political pluralism, following almost a year of violence. EU politicians dismissed the validity of the poll.

China Loans

Venezuela and China signed $10 billion in agreements yesterday to finance oil, infrastructure and agricultural projects, Ramirez said. The countries also renewed a joint economic development fund for $4 billion, he said.

China Development Bank Corp. (SDBZ) will lend $4 billion to Petrosinovensa, a venture between PDVSA and the China National Petroleum Corp. (CNPZ), to boost oil production in the Orinoco belt to 330,000 barrels a day from 120,000 by 2014, Ramirez said.

The Venezuelan state oil producer will get a $500 million credit line from China Development Bank to pay for drilling rigs and other equipment, Ramirez told reporters. PDVSA has no plans to sell bonds this quarter, according to Ramirez.

Citic Group

PDVSA will also get a loan of $1.5 billion from Industrial & Commercial Bank of China (601398) for housing to be built by Citic Group Corp., China’s biggest state-owned investment company, Ramirez said.

PDVSA agreed to transfer 10 percent of the Petropiar venture in the Orinoco heavy crude belt to Citic Group as well as a stake in the Las Cristinas gold mine. Chevron Corp. (CVX), the second-largest U.S. energy company, owns a 30 percent share in Petropiar.

“PDVSA has 70 percent of Petropiar, and we are offering Citic 10 percent from our share,” said Ramirez. “We are currently setting a price and the financial mechanism to pay for their participation apart from financing to increase current production of around 180,000 barrels a day.”

Margarita Arango, a Caracas-based spokeswoman for Chevron, yesterday declined to comment on Citic’s entrance into Petropiar.

Venezuela is in talks to give Citic a 20 percent stake in Las Cristinas and wants to use Chinese technology and an investment of $500 million to develop infrastructure at the gold mine, said Ramirez.

President Hugo Chavez gave PDVSA the authority to mine for gold on Aug. 23 after he nationalized the industry. Venezuela took control of the Las Cristinas mine, which may hold 27 million ounces of reserves, in February last year after canceling a license held by Crystallex International Corp. (CRYXF), a Canadian gold producer.

To contact the reporters on this story: Nathan Crooks in Caracas at ncrooks@bloomberg.net; Jose Orozco in Caracas at jorozco8@bloomberg.net

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net.