How has war affected Syria's oil and gas sector?

Syria's 8-year war has seen the Damascus regime lose control of key oil fields and caused state hydrocarbon revenues to plummet by billions of dollars.
Thursday 18/07/2019
A picture taken on July 9, 2017 shows an employee standing at Syria's Arak gas field, in the central province of Homs, a few weeks after it was retaken by government forces from the hands of jihadists of ISIS. (AFP)
A picture taken on July 9, 2017 shows an employee standing at Syria's Arak gas field, in the central province of Homs, a few weeks after it was retaken by government forces from the hands of jihadists of ISIS. (AFP)

Syria's 8-year war has seen the Damascus regime lose control of key oil fields and caused state hydrocarbon revenues to plummet by billions of dollars. Weak production forced Syrian President Bashar Assad's regime to import oil but Western sanctions on Damascus and Tehran are hampering incoming tankers.

Here's an overview:

Who controls what?

In 2013, Syria's oil reserves were estimated at 2.5 billion barrels and gas supplies at 241 billion cubic metres. Control of these is split between the regime and the Kurdish-led Syrian Democratic Forces (SDF), which have been fighting the Islamic State (ISIS).

The US-backed SDF control Syria's largest oil field in Al Omar in the eastern province of Deir ez-Zor, as well as the Tanak and Jafra fields. They also hold the Rmeilan field in the north-eastern province of Hasakah, as well as smaller ones there and in the northern province of Raqqa.

The Russia-backed regime holds the country's largest gas field in Shaer, as well as those of Sadad and Arak. It also controls fields in Deir ez-Zor, Raqqa and the central province of Homs.

What's the damage?

Before the war, oil and gas were key to the country's economy. In 2010, they contributed about 35% of export earnings and 20% of state revenue, the Syria Report economic publication said.

After war broke out in 2011, production plummeted as fighting and bombardment destroyed infrastructure and the government lost control of its largest fields. International oil companies suspended activities, including to comply with Western sanctions on the regime.

Up to $74.2 billion in revenue has been lost in the war, Oil and Mineral Resources Minister Ali Ghanem has said.

Crude oil production plunged more than 99% from 2010-16, from 385,000 barrels per day (bpd) to 2,000 bpd, figures provided by Ghanem in April indicate. Natural gas production fell 69% from 21 million cubic metres per day to 6.5 million over the same period.

Since the regime took back Homs oil and gas fields from ISIS in 2017, production has increased to 24,000 bpd for oil and 17 million cubic metres for gas, Ghanem said. However, this is 20% of Syria's oil needs and 60-70% of its gas requirements.

Are sanctions biting?

After production plummeted Damascus resorted to importing hydrocarbons to fulfil its needs. The Syrian government turned to ally Iran, which opened a credit line to supply Damascus with oil.

However, Western sanctions on oil shipping, as well as US punitive measures against Iran, complicated imports. In November, Washington slapped fresh sanctions on Tehran, accusing it of creating a complex web of Russian cut-out companies and Syrian intermediaries to ship oil to Damascus.

A fuel and gas crisis hit regime-held areas last winter and spring, causing the government to take austerity measures.

From October 2018 to the start of May this year, no oil tanker reached Syria, pro-regime Al-Watan newspaper reported. Damascus also accuses Egypt of having closed the key Suez Canal shipping lane to vessels heading to Syria.

Britain recently detained a tanker carrying Iranian oil on suspicions it was heading to Syria but Tehran denied that was its final destination.

In June, Damascus accused an unnamed foreign entity of "sabotage" of underwater pipelines to its Banyas oil refinery on the Mediterranean.

What options for Damascus?

With the country's most important oil fields in the far east still out of reach, Damascus faces two options: strike a deal with the SDF or military reconquest.

The Kurdish-led forces have insisted that any deal with the regime would have to ensure an equal sharing of oil and gas.

Before the war, crude extracted in the east was transferred to either Homs or Banyas to be refined. Syria's Kurds only have small refineries designed to meet just local needs.

The regime taking back military control of the eastern oil fields would allow Syria to be self-sufficient in all petroleum products, Ghanem said.

During the conflict the regime has bought oil from Kurdish and ISIS-held areas to secure part of its needs, several sources have said.

Analysts said revenues from the oil and gas sectors are likely to be key in rebuilding Syria should a peace deal be struck and sanctions lifted so exports could resume.

(AFP)