EIA: Syria’s oil production unlikely to recover for months, maybe years

Syria’s oil and gas production is unlikely to recover in the near term because of ongoing hostilities between the Syrian government and opposition forces, the US Energy Information Administration said in an update to its country report on Syria.

EIA said Syria’s oil production has declined dramatically since March 2011 because of the conflict and subsequent imposition of Western-led sanctions and the resulting loss of oil export revenues. Although Syria’s natural gas production was not affected as significantly as oil, EIA estimates dry gas production is down by at least 30% compared with pre-conflict production levels.

“Even when the fighting subsides, it will take months or possibly years, for the Syrian domestic energy system to return to pre-conflict operating status,” EIA said. “Production and exports of crude oil have fallen to nearly zero, and the country is facing supply shortages for some refined products.”

OGJ estimated Syria’s proved oil reserves at 2.5 billion bbl as of Jan. 1, a total larger than all of Syria’s neighbors except for Iraq (OGJ Worldwide Report, Dec. 2, 2013, p. 30).

Oil production plummets

EIA estimated Syria’s oil production, which averaged more than 400,000 b/d during 2008-10, at less than 25,000 b/d in January.

The 2014 production level included production outside control of the Syrian government. Media reports in late 2013 indicated the Syrian government had lost control of nearly all of the country’s major oil fields.

“Most of the international oil companies previously involved in Syria’s energy sector have suspended operations, and according to Syrian government officials, the only oil companies still operating in Syria as of September 2013 were Hayan Petroleum and the Elba Petroleum Co., but they were operating without their IOC partners,” EIA said.

“However in December 2013, the Syrian government and Russian company SoyuzNefeGaz came to terms on a 25-year exploration agreement in Block 2 offshore,” EIA said.

Syria’s oil fields have escaped damage from fighting and sabotage, but production was stopped because of limited export opportunities and limited refining capacity.

Syria short of heating oil, diesel

Syria is having difficulty importing petroleum products, EIA said, noting the country is short of heating oil and diesel fuel. The shortfalls are likely to continue, EIA said.

“As of January 2014, Syria’s refineries are running at less than full capacity,” the report said. “According to government sources, the combined capacity of Syria’s two refineries has fallen to roughly half their pre-conflict output.” The refineries are in Hams and Banias.

“Several proposed refineries are now on hold or cancelled altogether, such as the proposed 100.000 b/d facility at Abu Khashab backed by the CNPC, which was cancelled because of the security situation in the country,” EIA said of the Chinese National Petroleum Corp.

Syria’s consumption of products fell below 260,000 b/d in 2012, and EIA estimates that 2013 consumption will be even lower once the data becomes available.

Meanwhile, the Syrian government continues to subsidize domestic consumption of petroleum products.

“In the first half of 2013, the government spent more than $1 billion on petroleum subsidies, according to the Minister of Petroleum and Mineral Resources,” EIA said.

Contact Paula Dittrick at paulad@ogjonline.com

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