Syria has continued its pattern of economic growth only slightly higher than its population growth in recent years, despite some limited attempts to reform its economy. High prices for its modest quantities of oil exports have offset problems in other sectors of the countrys economy in the short-term. Real GDP growth in 2004 was 3.4 percent, and growth is projected at 3.7 percent in 2005. The U.S. imposed additional economic sanctions against Syria in May 2004, under the provisions of the Syria Accountability Act, though the economic effects have been modest, due to the small volume of U.S. trade and investment with Syria. U.S. energy companies operating in Syria were not forced to divest their investments in Syria. Syria ended its long military occupation of Lebanon in April 2005, under pressure from the international community to implement United Nations Security Council Resolution 1559.
Syrias oil industry faces many challenges in the years to come. Oil output and production continues to decline due to technological problems and depletion of oil reserves. Since peaking at 590,000 bbl/d in 1996, Syrias oil output has fallen, to an estimated 460,000 bbl/d in 2004, as older fields, especially the large Jebisseh field discovered in 1968, have reached maturity. Syrian oil production is expected to continue its decline over the next several years, while consumption rises, leading to a reduction in Syrian net oil exports. If this trend continues, it is possible that Syria could become a net oil importer within a decade. Export levels, which had been temporarily buoyed by illegal imports from Iraq, fell sharply after the invasion of Iraq in March 2003.
Syria hopes to reverse the trend toward declining oil exports through intensified oil exploration and production efforts, plus a switch from oil-fired to natural-gas fired electric power plants. Syria also has opened up new blocks for oil and natural gas exploration, with the Oil and Mineral Resources Ministry receiving bids from several international companies in December 2001 on five exploration areas. Awards for these blocks were made in January 2003, with Shell receiving exploration rights in the Damascus-Palmyra area and Indias ONGC Videsh receiving another onshore block. Independents Ocean Energy and Stratic Energy also received awards. In 2003, three new exploration deals were announced, with companies receiving awards including Canadas Tanganyika and PetroCanada, Chinas CNPC, and Devon Energy and Gulfsands Petroleum of the United States. Another round of awards took place in January 2004, with companies involved including U.S. independent IPR Transoil, Indias ONGC, and Croatias INA Naftaplin. In May 2005, Gulfsands Petroleum purchased Devon Energys 80 percent stake in Block 26, then sold a 50 percent stake in the project to Soyuzneftegaz of Russia. Gulfsands remains as operator of the project with a 50 percent ownership stake. INA Naftaplin reported a discovery of oil at the Jihar field in September 2004, which it expects to produce 5,000 bbl/d once it is developed.
Syrias main oil producer is al-Furat Petroleum Co. (AFPC) a joint venture established in 1985 and owned by the Syrian Petroleum Company (SPC), Shell, and PetroCanada. AFPCs fields are located in the northeastern Syria -- particularly the Deir ez-Zour region, where commercial quantities of oil were discovered in the late 1980s -- and are producing about 350,000 bbl/d of high quality light crude.
AFPCs main oil field is al-Thayyem, although production there has been declining since 1991. Another important field -- Omar/Omar North -- began production in February 1989 at 55,000 bbl/d. Shortly thereafter, operator Shell was pressed by the cash-strapped Syrian government to step up production (against Shells advice) to 100,000 bbl/d. The result was serious reservoir damage, and in April 1989, output plummeted to 30,000 bbl/d. Currently, Omar produces about 15,000 bbl/d from natural pressure and 30,000 bbl/d from water injection. Other AFPC fields include al-Izba (light oil), Maleh (34o API gravity oil), Sijan, and Tanak. Production from fields run by SPC peaked in the late 1970s at more than 165,000 bbl/d.
SPCs fields include: 1) Karatchuk -- Syrias first discovery, located near the border with Iraq and Turkey; 2) Suwaidiyah -- a giant heavy oil field located south of Karatchuk in the Hassakeh region (and extending into northwestern Iraq) which currently produces around 85,000 bbl/d; 3) Jibsah -- a major field producing both oil and gas; 4) Rumailan -- a small field near Suwaidiyah which produces heavy oil; and 5) Alian, Tishreen, and Gbebeh -- three small, depleting fields producing heavy oil. Chinas CNPC signed a contract with SPC in March 2003 to undertake an enhanced oil recovery project for Gbebeh, which is to increase production from the current 4,500 bbl/d to 10,000 bbl/d.
Other Syrian oil fields include Maleh, Qahar, Sijan, Azraq, and Tanak. Jafra, discovered in late 1991 and located near Deir ez-Zour, is operated by TotalFinaElf and has current production of around 50,000 bbl/d. Besides conventional oil reserves, Syria also has major shale oil deposits in several locations, mainly the Yarmouk Valley stretching into Jordan.
Oil exploration activity in Syria has been slow in recent years due to unattractive contract terms by SPC, poor exploration results, and concerns about the possibility of additional U.S. sanctions. For these reasons, only a few companies out of more than a dozen operating in the country in 1991 remain in Syria at present. The recent bid rounds are an attempt to reverse this trend, but it is unclear how successful this will be. Officials of TotalFinaElf publicly expressed their intention to scale down their Syrian operations in May 2002, and ConocoPhillips announced in February 2004 that it was ending its operations in Syria.
Syrias two refineries are located at Banias and Homs. Total current production from these refineries is 239,865 bbl/d (132,725 bbl/d and 107,140 bbl/d, respectively). Syria is planning to construct a third refinery, with an initial capacity of 60,000 bbl/d (possibly increasing to 120,000 bbl/d), at Deir ez-Zour to supply products to the eastern part of the country. A feasibility study on this project reportedly was completed in January 1998, but it has not been implemented. 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 lighter products.
Syrias proven natural gas reserves are estimated at 8.5 trillion cubic feet (Tcf). Most (around three quarters) of these reserves are owned by SPC, including about 3.6 Tcf in the Palmyra area, 1.6 Tcf at the al-Furat fields, 1.2 Tcf at Suwaidiyah, 0.8 Tcf at Jibsah, 0.7 Tcf at Deir ez-Zour, and the remainder at al-Hol, al-Ghona, and Marqada. About half of Syrias gas is non-associated, with the rest either associated (with oil) or "cap" gas. In June 1999, a new natural gas field, called North al-Faydh, reportedly was discovered by SPC. The field reportedly has production potential of 35 million cubic feet per day (Mmcf/d).
In 2003, Syria produced about 245 Bcf of natural gas, up sharply from 205 Bcf in 2002. Syria plans to increase this production in coming years as part of a strategy to substitute natural gas for oil in power generation in order to free up as much oil as possible for export. A number of new gas-fired power projects are currently under construction or being planned. Another possible source of natural gas is imports. Syria signed agreements with Egypt, Jordan, and Lebanon in early 2001 for an onshore pipeline network (the "Arab Gas Pipeline") which would link the four countries and make Syrian imports of natural gas from Egypt a possibility. The section of the pipeline running from Egypt to northern Jordan currently is in the final stages of construction. An agreement was signed in January 2004 between Egypt, Jordan, Syria, and Lebanon for the extension of the pipeline into Syria and Lebanon. Syria issued an invitation for bids for the extension project in June 2005. Meanwhile, Syria has begun exporting a small quantity of natural gas to Lebanon.
In October 1997, Syria announced discovery of a large new natural gas field in the Abi Rabah area of the Palmyra region. In addition to supplying a new (completed in 1997), 375-megawatt, power plant at Zaisoun in central Syria, the Palmyra fields have been linked with a new pipeline to Aleppo, as well as to the Tishreen power plant in Damascus and the Mhardeh power plant in Homs. Najib, the fourth and final field to be developed in the Palmyra region, started production in 2000 at a capacity of 100 Mmcf/d. A modest-sized new discovery was reported in the Palmyra area in August 2002 by the Croatian company INA Naftaplin, which tested at about 9 Mmcf/d.
In September 2001, several months ahead of schedule, an important new, integrated natural gas project (called "Desgas") was completed in the Deir ez-Zour region, three years since a $430 million service agreement was signed between SPC on the one hand, and ConocoPhillips and TotalFinaElf on the other. The new complex utilizes approximately 175 Mmcf/d of previously-flared, "associated" (found together with oil) natural gas, in the Deir ez-Zour oil fields. TotalFinaElf and ConocoPhillips each hold 50 percent interest in the project, with ConocoPhillips as lead operator. ConocoPhillips announced in February 2004 that it intended to end its operations at Deir ez-Zour in the future, likely by letting the current contract lapse in 2005. The Deir ez-Zour complex now includes a natural gas gathering system and processing plant, plus a 155-mile pipeline to carry 150 Mmcf/d of natural gas to the grid serving western Syria.