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Chavez suspected of dealing with Syrian firm on U.S. blacklist

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BUENOS AIRES — Venezuela recently shipped fuel to a Syrian firm under U.S. government sanctions, in moves that could open the South American nation to punitive U.S. measures, according to energy experts.

Analysts say they have no doubt that the state-owned firm, Petroleum Venezuela, dealt with Syria's state oil company, Sytrol.

The U.S. Treasury Department placed Sytrol on a sanctions blacklist last summer, along with the Syrian Petroleum Corp. and the Syrian Company for Oil Transport (SCOT), which operates major oil export terminals.

"Any dealings by foreign firms with these blacklisted companies would technically be sanctionable," said Lejla Alic, an economist at the U.S. Energy Information Agency.

Although shipping oil to Syria for humanitarian reasons is not subject to sanctions, the Venezuelan oil company would have dealt with the blacklisted firms, experts said.

"There might be intermediaries involved in the shipments, but the Syrian state had to have received them," said Pedro Burelli, a former member of the board of directors of the state firm, known by its Spanish initials PDVSA.

"There is simply nobody on the private side who has logistics to do so."

A shipping consultant who asked not to be identified because he does business with PDVSA agreed.

"The history of diesel going into Syria has always been through Sytrol," he said.

"It's possible they could have put some company in business to receive these shipments, but Im sure it ended up with Sytrol and that's how it got put into the system."

Energy analysts for the U.S. government also agreed that the shipments were more than likely handled by Sytrol.

Oil minister admits shipments

Venezuelan Oil Minister Rafael Ramirez has confirmed media reports that PDVSA sent two shipments of fuel to Damascus after Western sanctions were imposed on the Syrian regime, which is accused of killing thousands of protesters against the government.

"We've sent Syria two cargoes of diesel [fuel], and shipments will continue as they are needed," Mr. Ramirez said. "We have a high degree of friendship and cooperation with Syria."

One cargo of diesel fuel with an estimated value of $50 million left Venezuela in February on the tanker Negra Hipolita. It was bound for the Syrian port of Banias. An earlier shipment was sent in November.

On March 5, a Venezuelan congressman, Adel El Zabayar with Mr. Chavezs party, told reporters that PDVSA is planning a third shipment.

Experts say Washington could retaliate against Venezuela - which also owns the Texas-based company Citgo and supplies crude oil to U.S. Gulf Coast refineries - by restricting PDVSA's access to American financial institutions.

That, however, could have a negative impact on Citgo and ultimately spell trouble at the gas pumps, where the price of a gallon of gas is already in the $4 range.

"Venezuela represents 8 percent of U.S. imports, so any action against it could drive up gas prices," said Boris Segura, a Latin American analyst for Nomura Securities.

A Treasury Department spokesperson said the department does not comment on possible enforcement actions.

Chavez fears no sanctions

Last year, Washington slapped partial sanctions on PDVSA for supplying fuel products to Iran. Those measures did not restrict Venezuelan oil exports to the U.S. or affect Citgo in any way.

"[President Hugo] Chavez does not fear sanctions and, as a matter of fact, might actually be tempting them for his own gain," said Mr. Burelli.

Mr. Chavez, currently facing a potentially life-threatening recurrence of cancer, is in a tough political presidential re-election campaign against an increasingly popular opponent, Henrique Capriles. The election is slated for October.

"He will use any position Washington takes against him to make it seem like he isn't fighting anybody but the U.S., and that the [domestic political] opposition is just a lackey," Mr. Burelli said.

Eddie Ramirez, another former director of PDVSA, added: "I believe it is preferable that the U.S. not apply sanctions on PDVSA right now because Chavez will blame it for trying to strangle Venezuela."

The U.S. House Foreign Affairs Committee voted on March 7 to approve the Syria Freedom Support Act, which would sanction those who sell or provide to Syria refined petroleum products worth more than $1 million.

Some influential voices on Capitol Hill worry Mr. Chavez might take his Middle East sympathies beyond rhetoric and fuel aide.

"Venezuela, in sympathy with its friend Iran, could cut off its oil exports to the United States or take other steps to disrupt oil supplies," Sen. Richard G. Lugar, Indiana Republican, wrote in a Miami Herald newspaper editorial last month.

He called on President Obama to warn Mr. Chavez that any such move with Iran would be viewed as a threat to U.S. national interests.

Some experts say that Mr. Chavez is unlikely to declare an oil embargo on the United States because he has few customers aside from U.S. firms capable of processing Venezuela's heavy crude oil.

They say Mr. Chavez may need U.S. revenue more than ever as he builds new housing developments and expands social programs in run-up to elections. The Venezuelan government budget shows current year outlays rising 46 percent from 2011.

PDVSA and the Syrian Embassy in Washington did not respond to interview requests.

This article is based in part on wire service reports.

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