Origins and Evolution of Syrian Oil Industry

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Origins of Industry

Although Syria awarded its first oil concessions to foreign firms during the 1930s, it did not emerge as an oil producer until the late 1960s. Until the sharp increase in oil prices in the early 1970s, Syria earned more from fees for the international pipelines that crossed its territory, such as Tapline coming from Saudi Arabia and the Kirkuk-Banias pipeline coming from Iraq, than from domestic oil production.

In 1956 a US company discovered oil at Qarah Shuk (now known as the Karatchuk field) and in 1959 a West German firm discovered the Souedieh field, located around 15 kilometres south of Karatchuk.[1]

Nationalization in the 1960s

In 1964 the Syrian government nationalised the oil industry and in the late 1960s the Syrian General Petroleum Company (SGPC) brought the Karatchuk and Souedieh fields on stream with Soviet assistance. The oil at these fields is both of a heavy API grade and sour (with a high sulphur content). The two fields continued to produce oil into the 1980s.

Syria became a net oil exporter in 1968 following the completion of a 663-kilometre pipeline to transport oil to the Tartous Terminal on the Mediterranean coast.[1]

Expansion in Production in 1970s

The state-owned Syrian Petroleum Company (SPC) was established in 1974 and was subsequently responsible for granting permission to international oil companies to explore and invest in the oil and gas sector according to production sharing contracts.[2]

During the 1970s oil exploration intensified in Syria. The SPC discovered the large Rumailan field, as well as several smaller fields producing smaller amounts of heavy crude. However the launch of operations at the Jubaysah field in 1975, where oil with an API gravity of 40.2, suggested that Syria may in the future discover large quantities of light crude.

Western companies returned in 1977 when Pecten, a Shell subsidiary won a concession in north--central Syria. Chevron, Pennzoil, and Marathon Oil also won exploration concessions in the 1980s. The SPC also continued exploration and drilling to bring the small Qayrik, Wahab, Sa'id and As Safih fields on stream by the mid-1980s.[1]

Discovery of Light Crude in the 1980s

The discovery of large light crude fields in the mid-1980s, particularly Pecten's discovery of the Thayyem Field in 1984, boosted the role that oil played in the Syrian economy. Output began to expand rapidly and by 1994 oil exports of $2.06 billion accounted for nearly 60% of Syria’s total exports.[3]

The light oil now being uncovered had an API gravity of 36 with a low sulphur content, which allowed Syria to reduce its own imports of the crude required for use in domestic refineries. By the mid-1980s Syria had two domestic pipeline systems and two refineries.[1]

Syria's natural gas was discovered in conjunction with oil exploration operations. Although into the 1980s most natural gas was flared, the country began exporting small quantities of liquid petroleum gas (LPG) in late 1981. Marathon also made two gas discoveries in 1982 and 1985 at Sharif-2 and Ash Shair 1.[1]

The Al Furat Petroleum Company (AFPC), Syria's most prominent joint venture, was established in 1985 between the Syrian Petroleum Company (SPC), Shell and PetroCanada.[4]

Decline in Production in the 1990s

According to the figures in the BP Statistical Review, Syria's oil production levels did not rise significantly through the 1990s (rising from 407,000 bpd in 1990 to 548,000 in 2000).[5]

Since the mid-1990s Syrian oil production and exports have been declining while domestic oil demand has been steadily rising, partly as a result of the country's policy of petroleum product subsidies. According to the Middle East Economic Survey Syria spent $3 billion on petroleum product subsidies in 2010. The Syrian government had announced a plan to phase out these subsidies prior to the 2011 uprising, however the political events forced a delay.[6]

Impact of international sanctions from 2004

Since 2004 various sets of international sanctions have been imposed on the Syrian regime by the US and the EU, with implications for the country's extractives industries.

Main article: Impact of Sanctions on Syria

References

  1. 1.0 1.1 1.2 1.3 1.4 "Syria: Industry" US Library of Congress Country Studies, retrieved 8 March 2012.
  2. "Activities" Syrian Petroleum Company, retrieved 8 March 2012.
  3. "Syria Petroleum And Natural Gas" Cafe Syria, retrieved 8 March 2012.
  4. "Extraction of Crude Petroleum in Syria - Overview" Mbendi, retrieved 8 March 2012.
  5. "BP Statistical Review of World Energy 2011" BP, retrieved 8 March 2012.
  6. "Syria: Industry" EIA, retrieved 8 August 2011.

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