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Syria Reaches Oil Deal with Ally Russia

Source: Reuters 8/3/2012, Location: Middle East

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Syria has reached an agreement with ally Russia to secure much-needed fuel as a delegation of ministers sent by President Bashar al-Assad asked Moscow to help alleviate the effects of sanctions on the war-torn country.

The trip was a rare foreign visit made by high-level Syrian officials, whose circles of support are shrinking as violence mounts between rebel fighters and forces loyal to Assad, who the West and Arab countries say must leave power.

Under the deal, Syria will export its crude oil to Russia in exchange for refined oil products, which Damascus sorely needs to keep its economy and military running.

"Russia wants to help the Syrian people," Syrian Deputy Prime Minister for Economic Affairs Qadri Jamil told reporters in Moscow.

"We will deliver our oil and receive gasoline and fuel oil; it will be a barter," he said, adding that Syria is producing about 200,000 barrels per day.

However, Syria's Oil Minister Said Heidi said production was less than 140,000 barrels per day.

Russia, with China, has used its U.N. Security Council veto to shield Assad from harsher sanctions during a 17-month rebellion that in recent weeks has reached Syria's biggest cities.

Likewise, Syria is one of Russia's last Middle East footholds and hosts a Russian repair and maintenance facility on its coast. Damascus bought nearly $1 billion in arms from Moscow last year, or some 8 percent of all of Russia's arms exports.

A Russian military source was quoted as saying on Friday that Moscow was sending three naval ships and up to 360 marines to Syria, but the Defence Ministry said there was no plan for the vessels to dock at the port of Tartus.

The delegation of economic officials including the country's oil and finance ministers held talks with Russian government and private sector officials on ways to alleviate the economic effects of sanctions on Syria. "We need oil, oil products. Shortages of these materials are making the situation in the country difficult," Jamil said at a news conference.

Jamil, who studied at Moscow State University during the Soviet era and speaks fluent Russian, also said Syria had asked for credit from Russia and that the size and terms of any loan would be decided "within weeks".

Even with the promise of the swap deal in hand or a potential loan agreement, Jamil was evasive over the details of how they would benefit a government whose days analysts and some western governments say are numbered.

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