Syria is important to world oil markets as a significant non-OPEC producer, as well as a key to stability in the crucial Middle East region.
Syria is critical to overall Middle East peace efforts due to its large military and its status as the only major
power bordering Israel which has not signed a peace
treaty. In addition, Syria's occupation of large parts of
Lebanon, its historic rivalry with Iraq for regional
influence, its ties to Iran and Iranian-supported
fundamentalist groups, as well as tensions with Turkey
over water resources, the Kurdish issue, and territory
(Antioch) disputed since 1923 add to its status as a
potential source for regional instability. Syria remains
subject to U.S. economic sanctions because the State
Department lists Syria among countries supporting
terrorism. In addition, despite numerous personal visits
to Damascus by US Secretary of State Warren
Christopher, the core issue of the future of the Israeli-occupied Golan Heights remains to be resolved. Recent offers of bilateral talks from Israeli Prime Minister
Benjamin Netanyahu have been met with a skeptical,
cautious attitude at best.The Soviet Union's demise in late 1991 pushed Syria to forge new ties with the West and move toward economic self-sufficiency, as well as a slow transition to a more market-based system. Economic reforms since 1991 have helped Syria to increase economic growth, although inflation remains a problem. The reforms give substantial incentives to private business, including tax incentives for new investment, and allow exporters to keep 75% of their hard-currency earnings. Private investors, with financial backing from the Gulf states, have been expanding into various sectors of industry. This has encouraged the development of textiles, pharmaceuticals, food-processing and other light industries, many built by wealthy Syrians from abroad.
To date, the majority of investment projects have involved Arabs rather than Westerners. Syria's confusing, multi-tiered exchange rate system, along with an antiquated banking and finance system, has discouraged western firms from investing in the country. As of March 1996, Syria was poised to begin negotiations on a "partnership" arrangement with the European Union (EU) as part of EU plans to create a 27-nation Euro-Med free trade zone with the Middle East and North Africa by 2010.
Real GDP grew by 6.1 percent in 1995, and is expected to increase another 5.5 percent in 1996. Relatively high prices for oil and cotton, Syria's two main hard currency earners, combined with strong production of both these goods, has contributed to the Syrian economy's strong performance. Foreign aid and private investment inflows also have helped, as have the reforms mentioned above. Overall, Syria's economic policy at present might best be described as "pluralist", with the private, mixed, and public sectors coexisting relatively equally.
Inflation in 1995 reached 20 percent, largely as a result of the government's loose monetary policy, combined with a highly restrictive import policy. In response, shortages of basic consumption goods has helped promote a thriving black market in Syria, and has contributed to inflationary pressures. In addition, recent government decisions to remove subsidies and price controls on numerous items, and to depreciate the country's currency, for the time being have further exacerbated inflation.
Foreign debt also remains a serious problem for Syria,
although most (around $11 billion) of the country's
approximately $18 billion debt is owed to the former
Soviet Union and is unlikely to be repaid. An
additional $3 billion is owed to western countries, and
$1 billion to Arab and Islamic funds. Syria's heavy
debt burden has limited the country's ability to secure
fresh credit, particularly from European credit agencies,
although Arab countries continue to provide aid, partly
as a reward for Syria's opposition to Iraq.
Syria's main oil producer is al-Furat Petroleum Co.
(AFPC) a joint venture established in May 1985
between state-owned Syrian Petroleum Company (50 %
share), Pecten Syria Petroleum (15.625%), and foreign
partners Royal Dutch/Shell (15.625%) and Germany's
Deminex (18.75%). Al-Furat's fields in the northeast --
particularly the Deir el-Zour region, where commercial
quantities of oil were discovered in the late 1980s -- are
producing about 400,000 b/d of high quality light crude.
But there is little expectation of any significant increase
in output. The completion of a 60,000 b/d development
at Jafra, discovered by French company Elf-Aquitaine
in the Deir el-Zour area, marks the last of its size
planned for the near term.
Oil exploration activity is slow at present due to
relatively unattractive contract terms and poor results.
For these reasons, only 5 companies (Elf, Shell,
Deminex, Tullow, and Marathon) out of 14 operating in
the country in 1991 remain in Syria at present. This
pullout of foreign oil expertise could contribute to a
decline in Syrian oil output over the next few years,
although the country's goal is to maintain oil output at
550,000-600,000 b/d through the year 2000.
Other major Syrian oil fields include: Maleh
(production of more than 50,000 b/d); Qahar (40,000
b/d); Sijan (35,000 b/d); Azraq (30,000 b/d); and Tanak
(18,000 b/d). Jaffra, discovered in late 1991, was first
expected to have potential for more than 60,000 b/d in
production. Currently, Jaffra is producing only 20,000
b/d, however.
On June 10, 1995, an explosion at the Al Izba field
(located about 15 miles east of Deir el-Zour) claimed 5
lives, burned around 25,000 b/d of oil and over 100
million cubic feet per day of natural gas. The field,
operated by the al-Furat consortium, normally produces
about 55,000 b/d of 37 degree API oil. In early August
1995, firefighters and engineers from Boots and Coots,
as well as al-Furat, managed to cap the blowout.
In late June 1996, President Asad replaced Oil and
Mineral Wealth Minister Nader al-Nabulsi, who had
held the post since June 1992, with Mohammed Mahir
Husni Jamal. Al-Nabulsi was removed as part of an
anti-corruption drive, after having been accused of
using his position as head of AFPC during the late
1980s to enrich himself illegally. Jamal is a geologist
who was appointed in early 1996 as AFPC's Chairman
of the Board.
Syria markets all of its crude oil, including that
produced by foreign companies, solely through state
marketing company Sytrol. Prices for Syrian Light and
Suwaidiyah blends are tied to the price of dated Brent
and are adjusted monthly. At present, Sytrol has term
contracts with more than 20 companies, including Total,
Veba, Bay Oil, Conoco, Chevron, Repsol, British
Petroleum, Shell, and Marc Rich.
As increased volumes of natural gas feedstock become
available, and given abundant phosphate reserves, Syria
is adding capacity to produce fertilizer. At present,
Syria has two nitrogenous fertilizer plants and one
phosphate-based unit, all located at Homs. Syria also
has plans for significant further expansion in fertilizer
production, including a 450,000 ton per year
nitrogenous fertilizer complex near the northeastern
town of Hasaka. This plant would utilize gas from the
Omar field. In addition, a 500,000 ton per year triple
super-phosphate plant is being constructed near Palmyra
by Bechtel and Makad International of Oregon.
A key challenge for the Syrian natural gas industry is
geographical, with gas reserves located mainly in
eastern Syria, while population is centered in western
and southern Syria. The state-owned Syrian Petroleum
Co. (SPC) is currently working to increase Syria's gas
production through several projects. Palmyra in central
Syria is the site of much of this activity, including
development of the Al Arak gas field, which came on
stream at the end of 1995. Two other "sweet gas"
fields in Palmyra -- Al Hail and Al Dubayat -- came
online in April 1996, while two "sour gas" fields --
Najib and Sokhne -- are scheduled to begin producing
by end-1996 or early 1997. In addition to supplying a
new, 375-megawatt power plant at Zaizoun in central
Syria, the Palmyra fields also are to be linked with
pipelines carrying increased gas production from the
Omar field to the Tishreen power plant in Damascus
and the Mhardeh power plant in Homs.
Energy ministers and other officials from Syria, Turkey,
Egypt, Jordan and Iraq met in July 1995 to discuss a
$600 million project to link their electric power grids.
An agreement is expected to be signed by late 1996.
Linkage between Egypt and Jordan is expected to be
completed by August 1997 and between Jordan and
Syria in early 1997. This project would enable the
transfer of reserve electricity among the member states.
In addition, Lebanon has agreed to import 10 percent of
its electricity from Syria. A $90.7 million loan to help
finance linkage of the Syrian and Jordanian electricity
networks was agreed to in September 1995. In
December 1995, the European Investment Bank agreed
to loan 13.5 million ECU (European Currency Units) to
the Turkish Electricity Generation and Transmission
Corporation (TEAS) to help interconnect the Turkish and Syrian grids by installing a 115-mile long
transmission line from Turkey's Attaturk Dam to Aleppo, in northern Syria.
As part of its strategy to save oil for hard currency
exports, Syria plans to build several natural gas,
combined-cycle power plants, and to convert the
country's major oil-fired plants to natural gas. Two of
Syria's largest power stations -- the Mahrada and Banias
plants -- have been converted from fuel oil to natural
gas in recent years. Gas for these two plants comes
from the Palmyra fields. Syria also plans to increase
gas usage at the duel capacity (fuel oil or natural gas)
Tishreen Power plant. Gas for Tishreen is to come from
the Omar treatment plant. In addition to these plants,
Suwaidiyah Station II had five new gas turbines
installed in 1989, while Suwaidiyah I operates mainly
on associated gas from nearby fields.
In mid-August, 1995, Syria and Argentina agreed to
study the possible sale of a 5-megawatt nuclear reactor
to Syria for medical use. The Argentine foreign
ministry has stated that whether this sale occurs or not
depends on the Middle East peace process, as well as on
agreement by Syria not to use the plant to make nuclear
weapons.
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File last modified: August 14, 1996
Contact:OIL
Syrian crude oil output has increased dramatically over
the past decade, from 170,000 b/d in 1984 to around
600,000 b/d currently. Oil output appears to have
reached a plateau, however, as older fields, especially
the 140,000 b/d Karatchuk field discovered in 1968,
reach maturity. Production is expected to decline
steadily over the next several years. Oil is critical to
Syria's economy, accounting for 70 percent of Syria's
total export earnings. Syria currently exports about
350,000 b/d of crude oil, mainly Syrian Light, a blend
of light and sweet crudes produced primarily from the
Deir el-Zour and Ash Sham fields. The country also
exports about 75,000 b/d of fuel oil and other products.
Syria is a member of OAPEC (the Organization of Arab
Petroleum Exporting Countries), although not of OPEC.Refining/Downstream
Syria's two refineries are located at Homs and Banias.
Total current production from these refineries is about
240,000 b/d (120,000 b/d each). This total includes
about 53,250 b/d of heavy Suwaidiyah crudes produced
by the SPC. Syria is planning to construct a third
refinery, with an initial capacity of 60,000 b/d (possibly
increasing to 120,000 b/d), at Deir el-Zour to supply
products to the eastern part of the country. In addition,
Syria plans to upgrade its two current refineries, both of
which are in urgent need of overhauling, to replace
output of fuel oil with light products.NATURAL GAS
Syria currently produces around 142 billion cubic feet
of natural gas per year, an approximately ten-fold
increase over the past decade. Syria's energy strategy
for several years has relied heavily on the substitution
of natural gas for oil in power generation in order to
free up as much oil as possible for export. Partly as a
result of this strategy, the share of natural gas in Syria's
electric generation capacity mix increased from 0.1% in
1982 to 18% in 1995. A number of new gas-fired
power projects are currently under construction or being
planned. At present, Syria's Jbeisa gas treatment plant
accounts for more than one quarter of the country's total
gas production capacity. ELECTRIC POWER
With Syrian electric power demand growing at about
the same pace as the economy, adding electricity supply
capacity is an important national priority. In September
1993, President Asad declared that a secure supply of
electricity was the right of every Syrian. Following this
declaration, contracts were awarded for the construction
of several new gas turbine power stations, starting with
a 600 megawatt (MW) station being built by Japan's
Mitsubishi Heavy Industries at Jandar, near Homs. In
addition, eight 125 MW gas turbine plants are being
built throughout the country by Italy's FiatAvio. A 630
MW hydroelectric plant also is being built by Sichuan
Machinery of China at the Tishreen dam on the
Euphrates River. Finally, the Saudi Fund for
Development has agreed to provide $200 million in
funding towards construction of a 1000-MW steam
power plant near Aleppo in northwest Syria. Syria's
Electricity Minister Mounib al-Bahr has stated plans for
spending $2 billion on energy investments.COUNTRY OVERVIEW
Head of State: President Hafiz al-Asad
Independence: 17 April 1946 (from League of Nations
mandate under French administration)
Population (7/95E): 15,451,917 (growth rate: 3.7% per year)
Location/Size: Middle East, at eastern end of the
Mediterranean Sea, between Turkey and Lebanon/71,498 sq.
miles (slightly larger than North Dakota)
Major Cities: Damascus (capital), Aleppo, Latakia, Homs
Languages: Arabic (official), Kurdish, Armenian, Aramaic,
Circassian, French widely understood
Ethnic Groups: Arab 90.3%; Kurd, Armenian, other
9.7%
Religion: Sunni Muslim 74%, Alawite, Druze, and other
Muslim sects 16%, Christian (various sects) 10%, Jewish (tiny
communities in Damascus, Al Qamishli, and Aleppo)
Defense (6/94E): Army (300,000), Navy (8,000), Air Force
(40,000), air defence (60,000), Army Reserves (300,000), Air
Force Reserves (92,000), Navy Reserves (8,000). An estimated
30,000 Syrian troops are deployed in Lebanon.
ECONOMIC OVERVIEW
Currency: Syrian Pound
Exchange Rates (1995): $1 = 41.95 Syrian pounds
("neighboring country rate"); $1=11.225 Syrian pounds
("official rate" for selected transactions); $1 = 43 Syrian pounds
(rate in Beirut market)
Gross Domestic Product (GDP - Market Exchange
Rates) (1995E): $53.5 billion
Real GDP Growth Rate (1996E): 5.5%
Inflation Rate (Consumer Prices, 1996E): 26%
Merchandise Trade Balance (1996E): -$1 billion
Major Trading Partners: Germany, France, Italy, Lebanon,
Turkey, USA, Saudi Arabia, Spain, Bulgaria, Belgium
Merchandise Exports (1994): $3 billion
Merchandise Imports (1994): $3.8 billion
Major Export Products: Petroleum, textiles, cotton, fruits
and vegetables, animals and meat.
Major Import Products: Foodstuffs, metal products,
machinery, transport equipment, chemicals and pharmaceuticals
Oil Export Revenues (1996E): $2 billion
Oil Export Revenues/Total Export Revenues (1996E): 60%
Foreign Debt (1996E): $17.9 billion
ENERGY OVERVIEW
Minister of Petroleum and Minerals: Mohammed Mahir
Husni Jamal
Proven Oil Reserves (1/1/96): 2.5 billion barrels
Oil Production (1995E): 618,000 barrels per day (b/d), of
which 610,000 b/d was crude oil
Oil Consumption (1994E): 208,000 b/d
Crude Oil Refining Capacity (1/1/96): 242,140 b/d
Net Oil Exports (1995E): 400,000 b/d
Major Crude Oil Customers (1994): European Community
Major Ports: Latakia, Banias, Tartus
Natural Gas Reserves (1/1/96): 7 trillion cubic feet
Natural Gas Production (1994E): 142 billion cubic feet
Electric Generation Capacity (1994): 4.2 million kilowatts
Electric Generation (1994E): 12.5 billion kilowatthours
(52% hydroelectric, 48% thermal)
ENVIRONMENT OVERVIEW
Total Energy Consumption (1994E): 0.66 quadrillion Btu
Energy Consumption per $1987 GDP (1993):42,300 btu
Energy Consumption per Capita (1994E): 47.5 million Btu
Energy-related Carbon Emissions (1994E): 11 million
metric tons (0.2% of world carbon emissions)
Carbon Emissions per $1987 GDP: 0.69 tons
Carbon Emissions per Capita (1994E): 0.79 metric tons
Major Environmental Issues: Deforestation, overgrazing,
soil erosion, desertification, water pollution
OIL AND GAS INDUSTRIES
Organization: The state-owned Syrian Petroleum Company
(SPC) controls all oil resources, and directly produces 140,000
b/d of Syrian output. Al-Furat Petroleum Company (AFPC), of
which 50% is owned by the Syrian Petroleum Company, and the
other 50% by three foreign companies (Shell, its U.S. affiliate
Pecten, and Germany's Deminex), is responsible for about 65
percent (400,000 b/d) of Syrian output. France's Elf produces
the remaining 60,000 b/d.
Major Foreign Oil Company Involvement: Shell Oil, Elf
Aquitaine, Marathon, and Tullow of Ireland have production
sharing agreements with the Syrian government.
Major Oil Fields: Deir el-Zour and Jafra in eastern Syria
produce about 400,000 b/d and 60,000 b/d, respectively;
Karatchuk in the far northeast produces about 140,000 b/d
Major Refineries: Syria's 2 refineries are located at Homs
and Banias. Each has a production capacity of 120,000 b/d. A
third refinery is planned for Deir el-Zour, capacity 60,000 b/d
initially, rising to 120,000 b/d.
Major Oil Export Terminals: Banias, Tartous, Lattakia
Links to other sites:
Latest EIA Detailed Annual Data (1994)
1997 CIA World Factbook - Syria
The Center for Middle Eastern Studies - Syria
Douglas MacIntyre
dmacinty@eia.doe.gov
Phone: (202)586-1831
Fax: (202)586-9753
URL: http://www.eia.doe.gov/emeu/cabs/syria.htm