Hassan Ibrahim | Hani Karazi | Hussam al-Mahmoud | Muwafaq al-Khouja

Signs of revitalizing the oil and gas sector are slowly emerging in Syria, following a nearly complete paralysis that lasted 14 years, as the sector represents a tremendous wealth capable of playing a pivotal role in the recovery of the economy, according to experts and specialists. However, there are numerous internal and external obstacles that must be addressed.

After the fall of the previous Syrian regime and the establishment of the interim government in Damascus, the sector began to move through Russian imports by sea and an agreement in progress with the Syrian Democratic Forces (SDF) controlling the oil fields in eastern Syria, while the government opened the door for tenders to supply oil and its derivatives, with Arab support in this sector.

In this report, Enab Baladi sheds light on the oil and gas sector, the features of its activity, and the nature of the steps taken by the interim government in Damascus, discussing with experts and specialists the effects of these movements on the sector and their role in recovery and lifting the Syrian economy from its crises.

Moves to revitalize a decayed sector

Years of war have exhausted the facilities of the oil and gas sector, which faced sabotage and theft, with its infrastructure deteriorating. The damage was exacerbated by primitive extraction and refining methods, and the announced damages were estimated at $115.2 billion from 2011 until the end of the first half of 2023.

While the country’s production was 385,000 barrels of oil per day in 2010, it sharply declined to between 24,000 and 34,000 barrels per day between 2014 and 2019, and now it produces approximately 110,000 barrels, distributed as 100,000 barrels from fields controlled by the SDF and 10,000 barrels from fields controlled by the new Syrian administration.

As for Syrian gas, its production decreased from 30 million cubic meters per day in 2010 to about 9.1 million cubic meters per day, distributed as 8 million cubic meters from the fields and wells controlled by the new Syrian administration in Damascus, and 1.1 million cubic meters from the fields and wells controlled by the SDF. This production only covers half of the needs of electricity generation stations, which require about 18 million cubic meters daily.

In recent years, Iran has supplied the Syrian regime with crude oil, with shipments arriving by sea through Syrian ports or overland through Iraqi territory, in unstable quantities that can reach 100,000 barrels per day, which have sometimes stopped as a form of pressure on Bashar al-Assad regarding other issues.

Immediately after the fall of the regime and Bashar al-Assad’s flight to Moscow, Tehran stopped supplying oil to Syria, informing the new Syrian administration that it owed between $30 billion and $50 billion for fuel supplies and other assistance during Assad’s rule.

There is no desire from Syria to repay these debts, with unofficial responses suggesting that Iran owes Syria $300 billion in compensation to the Syrian people and state for the damage caused by Tehran’s “criminal and oppressive” policies while militarily supporting its militias in favor of Assad’s regime.

Easing and lifting sanctions

The sector is beginning to recover, especially after the lifting and easing of international sanctions on Syria, which targeted key sectors of the Syrian economy, primarily the oil sector. These sanctions were intended to disrupt the activities of the former Syrian regime, reduce its revenues, and restrict Assad’s ability to finance repression.

The European Union lifted some sanctions, including those imposed on the energy sector, while the British government lifted sanctions on 24 Syrian entities, including several banks and oil companies, among them the Euphrates petroleum company, the Deir Ezzor petroleum company, Ebla, the General Oil Company, Mahroukat company, the Syrian Oil Transport Company, the Syrian Oil Company, the Homs Refinery, and the Baniyas Refinery.

The United States also eased some sanctions and issued General License No. 24 (GL24), which permitted transactions with governing institutions in Syria after December 8, 2024, as well as transactions to support the sale or supply or storage or donations of energy, including petroleum, petroleum products, natural gas, and electricity, to or within Syria.

This license lasts for six months, with the US government continuing to monitor the evolving situation on the ground and the possibility of renewing it after six months, according to a statement from a US State Department official to Enab Baladi.

Sanctions were the reason that forced 11 international companies responsible for 49.6% of total Syrian crude oil production in 2010 to abandon their operations.

Eastern Syria oil fields…

Waiting on the government

Most of the Syrian oil reserves and fields are concentrated in northeastern Syria, where the Autonomous Administration of North and East Syria (AANES) and its military wing, the Syrian Democratic Forces (SDF), control approximately 90% of Syria’s oil production and 45% of natural gas. This region is considered the breadbasket and oil hub for the country.

The SDF tightened its control over oil fields after battles against the Islamic State with support from the International Coalition led by the US, and production decreased due to poor handling, lack of expertise, and the primitive equipment used for extraction and refining.

The SDF marketed the oil it extracted in four directions: the first for domestic consumption, the second to the Kurdistan Region in Iraq, the third to opposition-controlled areas, and the fourth, which is the largest segment, was exported to areas controlled by the previous Syrian regime through agreements and intermediaries.

An agreement in progress

After the fall of the regime, the interim government in Damascus sought to conclude an agreement with the SDF to procure oil and gas from northeastern Syria, announced on February 22, which is an extension of previous understandings between the former regime and the SDF, with a complete review of the contract to align with “national laws” and local market needs, according to the public relations official of the interim government’s Ministry of Oil, Ahmad Suleiman.

The duration of the agreement for the procurement of oil was three months, with imported quantities from the SDF exceeding 15,000 barrels per day, in addition to quantities of natural gas ranging from 500,000 to 1 million cubic meters.

Two weeks later, the transitional Syrian president, Ahmed al-Sharaa, signed a deal with the SDF commander, Mazloum Abdi, which was described as “historic,” one of whose provisions stipulates the integration of all military and civilian institutions of the SDF into the Syrian state, including the oil and gas fields.

Following this agreement, the Ministry of Oil announced the commencement of discussions on the mechanism for receiving and overseeing the oil fields and wells in northeastern Syria, intending to form specialized committees to oversee the handover of the fields and wells and prepare comprehensive reports on their readiness and technical condition.

In contrast, a leader in AANES denied the transfer of oil fields to the Syrian government, confirming that work is still ongoing to form the committees concerned with negotiation files with Damascus, emphasizing that no agreement in this regard has yet been implemented.

An initial step “not enough”

The agreements between the SDF and the Damascus government in mid-February and the agreed quantities represent an initial step towards cooperation between the two parties, paving the way for the return of the fields to state authority under understandings between both sides, according to the economic researcher at the Omran Center for Strategic Studies, Manaf Quman.

Quman believes, in an interview with Enab Baladi, that the quantities mentioned in the agreement do not meet Syria’s needs and are insufficient to revitalize the electricity sector or to fill the shortages in fuel. Syria’s needs are much greater than the quantities proposed in the announcement.

The researcher pointed out that Syria needs about 150,000 barrels of oil per day, while the available production currently barely reaches 25,000 barrels. Additionally, Syria requires about 23 million cubic meters of gas per day, with the current availability around 6.5 million cubic meters.

The delivery of oil and gas fields from the SDF to the government depends on the sub-committees being worked on between the two parties, according to Quman, who believes that government management of the fields and the flow of oil and gas would alleviate the energy crisis, improve electricity hours, and ensure fuel supplies.

According to Quman, the electricity production capacity could rise to about 2,000 megawatts compared to less than 1,500 megawatts currently, which would reduce the power cuts.

The director of the Syrian program at the Syrian Observatory of Political and Economic Networks, Karam Shaar, considered that what is currently happening is an announcement allowing the current government’s areas to access more oil and gas.

Shaar stated to Enab Baladi that there has not yet been any change in Syria’s production capability or the current government’s ability to access new fields.

Enab Baladi contacted the public relations official at the Ministry of Oil for inquiries about the agreement, but did not receive a response by the time this report was published.

Russian oil: A gesture of goodwill

The second chapter to revitalize the oil sector came through Russia. After the overthrow of the previous regime, Syrian ports welcomed several Russian oil tankers, the first of which arrived on March 20, carrying about 100,000 tons of crude oil to the port of Baniyas on the Syrian coast.

On March 25, a second tanker also arrived in Baniyas, carrying another 100,000 tons of crude oil from Russia.

A third Russian tanker is expected to arrive on April 3, according to Reuters.

The arrival of Russian oil shipments raised questions about the nature of the relationship between the new Syrian administration and Russia, and what Moscow seeks in return for sending oil shipments to Syria, especially since Moscow has played the largest role over the years in bolstering Bashar al-Assad politically, attempting to rehabilitate him on regional and international levels, and militarily by killing Syrians and changing the course of the battles.

Researcher on Russian affairs Dr. Mahmoud al-Hamza believes that it is likely that Russia will not demand payment from the Syrian government for the quantities of oil it sent because it does not represent a significant commercial value for Russia. He thinks that Moscow’s purpose in sending oil is a gesture of goodwill to improve relations with Syria.

Al-Hamza added to Enab Baladi that Moscow wants to soften relations with Damascus to secure its presence in the Middle East by securing its military bases on the Syrian coast. He also believes that the Syrian file is present in the recent American-Russian negotiations concerning Ukraine, and the US is aiding in improving relations between Syria and Russia to ensure Israel’s security.

Three scenarios for paying for oil

The Syrian government has not disclosed the mechanism for settling the payment for oil shipments received from Russia, nor has Russia revealed any details about it.

Economic researcher Younis al-Karim told Enab Baladi that there are only three scenarios regarding how the Syrian government could pay for the imported oil from Russia.

The first scenario is that the payment for the oil might be made in exchange for shares of phosphate to Russia, which is very likely and was applied by the previous regime, where it used to pay part of its debts, especially to Iran, in exchange for granting those shares. However, since Bashar al-Assad’s fall, “we no longer know what happened to the phosphate, what the government shares are, and how much Russia receives in phosphate. Therefore, it is likely that phosphate will be paid to Russia in exchange for importing oil from it.”

The Ministry of Oil in the interim government of Damascus repeatedly announces tenders for investment in the phosphate sector, which represents a Syrian wealth estimated in most estimates at about 1.8 billion tons.

On February 12, the Ministry of Oil announced a tender to sell 175,000 tons of wet phosphate from phosphate mines in Palmyra. Many countries have shown interest in Syrian phosphate after Russia, through contracts with the previous regime, controlled a significant part of this sector.

The second scenario that the previous regime followed was to import oil through businessmen linked to it. Consequently, the Syrian government could implement a similar scenario, importing oil from Russia depending on some of those traders who have begun to consolidate their relations with Damascus.

Al-Karim cited the example of the Syrian Salvation Government (SSG) that operated in Idlib, which relied on the Watad fuel company for importing oil. Therefore, it is possible that Watad conducted import operations from Moscow and then sold them to the Syrian Ministry of Oil, which in turn sells them to the private sector, collects the funds, and then converts the funds into dollars.

The third scenario is that the value of fuels is settled directly by the Ministry of Oil. The decline in the dollar’s price and the liquidity freeze contributed to a partial rehabilitation of the foreign currency reserve, in addition to benefiting from aid funds provided to the Syrian government, which it used in attempting to improve the energy situation in Syria.

Tenders for supply

After the fall of the Assad regime, the Ministry of Oil announced several tenders to supply crude oil to Syria, at a time when the Syrian government was struggling to secure fuels through international suppliers continuously.

The latest tender was on March 27 of this year, where the Ministry of Oil stated that it was conducting the tender on behalf of the Baniyas refinery, inviting offers for the supply of light crude oil in a quantity equivalent to seven million barrels of oil with a seller’s option.

According to the announcement, the contractual quantity may increase by mutual agreement between the two parties, and the seller must deliver the quantities according to specifications detailed in the tender announcement.

The Syrian Minister of Oil and Mineral Resources, Ghiyath Diab, said during a press conference that importing fuel materials would be available to all international entities, companies, and countries without restricting their importation to the government only, explaining that the Damascus government has begun dealing with the private sector in this context.

In a special statement to Enab Baladi, the Director of Public Relations at the Syrian Ministry of Oil, Ahmad Suleiman, stated that the sources of the oil tankers arriving in Syria are diverse, implementing the tenders announced by the Ministry of Oil to import light and heavy crude oil and petroleum derivatives to meet the needs of citizens.

Researcher Younis al-Karim said that the Syrian government has opened the door for oil imports to traders for three reasons: the first is to claim that there is economic openness in Syria; the second is to enhance the process of privatization and to show that the entire country is moving towards privatization, and investments are available to traders and investment companies.

The third reason is to cover up who is undertaking the importation because it is not clear who is doing it—whether it is the private or governmental sector. Therefore, opening the door for tenders achieves this goal, according to al-Karim.

Obstacles preventing import promotion

In light of opening the bidding process, al-Karim pointed out that there are obstacles that may discourage traders from investing and importing oil, the most notable of which is that the oil refineries in Baniyas and Homs need a new influx of funds for repairs and to enhance their capacity to process the quantities of oil being imported.

Al-Karim added that the second obstacle is that the import operations, in the absence of local production consuming fuels, represent a burden and drain on foreign currency reserves, as supply will exceed demand, making the import process merely an emergency measure without profitability, and an attempt to manipulate the psychological factor for citizens, suggesting that there are oil tankers arriving in Syria.

The third obstacle lies in the lack of security discipline, which could expose the transported and refined oil shipments within Syrian territory to danger, particularly with the remnants of the regime continuing to destabilize security and stability in the country.

Arab energy supplies… Relying on US politics

The oil shipments that have begun arriving at Syrian ports come from Russia, a country attempting to establish new political relations with Damascus, despite a disturbing political past. However, these shipments do not satisfy the country’s needs, highlighting the regional Arab role in this issue as well. Qatar, the Arab state supporting the new government, proposed an initiative to supply Syria with natural gas via Jordan to contribute to electricity generation, according to an agreement involving the Qatar Fund for Development and the Jordanian Ministry of Energy and Mineral Resources, in cooperation with the United Nations Development Program (UNDP), which oversees the project’s technical implementation.

According to official statements, Qatar will support the energy sector in Syria by providing two million cubic meters of natural gas daily, which will assist in generating 400 megawatts of electricity, thus improving and increasing the electricity supply by two to four hours daily. This will positively impact the daily lives of citizens and support vital sectors in Syria.

According to the Syrian Minister of Oil and Mineral Resources, Ghiyath Diab, this initiative comes at a time when Syria is facing a severe shortage in electricity production due to a lack of gas and fuel, with the Jordanian side, through which gas passes, indicating that the agreement is short-term.

The lack of electricity negatively affects citizens’ lives and hinders the government’s efforts to improve energy infrastructure and create an encouraging investment environment, according to the minister.

Diab added, on March 14, that the initiative represents significant support to face the challenges of the energy sector and enhances Syria’s ability to achieve stability and economic growth, according to the official Syrian news agency (SANA).

The Director-General of the Qatar Fund for Development, Fahd bin Hamad al-Sulaiti, stated at the time that this step is “essential to meet the needs of the Syrian people for electricity” and reflects a joint commitment among all parties to work for the benefit of the region.

For his part, the Minister of Electricity in the interim Damascus government, Omar Shaqrouq, stated that the Deir Ali station is the primary future station for the Arab Gas Pipeline from Jordan, but other stations can be operated through it, as the gas network is interconnected.

He explained that the amount of gas incoming, despite its importance, represents “a small part” of Syria’s needs, amounting to 6,500 megawatts, but it will contribute to increasing the daily supply by about two additional hours, with further improvements expected by the end of Ramadan.

Syria suffers from a severe shortage of electricity, with government electricity only available for two or three hours a day in most areas.

The United Nations Development Program, which plays a key role in the initiative, affirmed through its deputy in Syria, Mohammed Mudawi, that the program is coordinating with the Syrian Ministry of Electricity and the Renewable Energy Center in Cairo to develop a strategic plan for the electricity sector in the country.

The UN’s contribution includes financial and technical support to the Ministry of Electricity and the Syrian Gas Company, in addition to assisting in the maintenance of the Arab gas pipeline within Syrian territory should any emergency arise requiring intervention, according to Mudawi.

In addition to the Qatari support, which does not cover the need, there has been talk in the period following the fall of the ousted regime about a Saudi role replacing the Iranian one in providing energy supplies, but this talk has not achieved official status, amid sanctions hindering financial and economic movement towards Damascus. Some countries have eased their sanctions on Syria, specifically regarding energy and financial transactions, yet US sanctions remain the decisive factor in this context.

Jordan also announced, last January, the launch of an initiative to provide 500 tons of liquefied petroleum gas to Syria daily for ten days. This step comes to help meet the needs of facilities dependent on liquefied petroleum gas to ensure the continuity of their operations amid the circumstances Syria is going through, following Syrian-Jordanian talks after the visit of Syrian Foreign Minister Asaad al-Shibani to Amman.

Economic researcher Ayman Dasuki clarified to Enab Baladi that the government previously announced tenders that did not attract interest from major oil traders due to fears of sanctions, and what is more critical are the payment mechanisms and conditions, which did not meet the requirements of major oil traders.

Regarding the continuity of the Qatari initiative or any Arab steps to supply Syria with energy, the researcher believes that this matter is primarily linked to US approval, given the persistence of sanctions. This approval remains contingent on conditions regarding the Syrian administration, which seems to be moving ahead step by step.

Despite Saudi Arabia’s declared interest in supporting stability, Riyadh is currently reluctant to engage directly amid ongoing sanctions, existing regional priorities, and awaiting a stable situation in Syria while the new administration takes serious steps in certain directions. This indicates that Saudi Arabia may have engaged in unannounced efforts to support stability initiatives in Syria, given its regional political weight and the relationships it possesses on the international level, according to the researcher.

Even Qatar, which launched the gas initiative, does not overlook the presence of obstructive US sanctions, as it delayed providing funds to support an increase in public sector salaries in Syria for fears of violating US sanctions, which represents a new setback to efforts to revive the war-torn Syrian economy, according to what Reuters reported on February 26.

For his part, economic analyst Dr. Firas Shaabo believes that part of the assistance that friendly and brotherly countries supporting the new Syrian state can provide includes energy supplies of oil, gas, and electricity. These forms of assistance are exempt from sanctions if they aim to improve the energy infrastructure, as this matter serves the citizens rather than the government and authorities.

The economic analyst argues that most countries are willing to support Syria’s stability, but this depends on the circumstances, as some sanctions are frozen and not lifted, meaning their return would represent a real problem. The lack of clarity in US policy regarding what happens in Syria, Saudi fears, and the fact that active Arab countries have not pushed to lift sanctions are all influential factors while awaiting a clear US stance, making the issue more political than merely economic.

Oil sector as an economic driver for recovery… Obstacles to overcome

The Syrian oil sector boasts vast resources that qualify it to play a critical role in the recovery of the country’s economy. However, there are still four main obstacles, according to a report by economist Dr. Karam Shaar:

• Western sanctions imposed on the sector hinder necessary foreign investment, and these sanctions have led to a decrease in the selling price of oil that the Syrian Democratic Forces (SDF) smuggles to Iraq.
• Intense bombings and unprofessional extraction techniques during the conflict may have led to a permanent reduction in the productive capacity of many oil fields due to seismic shifts. This uncertainty raises doubts about Syria’s ability to achieve self-sufficiency, let alone exports, without future discoveries or increased production—something that can only be confirmed through comprehensive inspections.
• The legal status of many foreign investments is already disputed and this dispute is likely to increase in the future.
• The future of the sector remains contested, with reports indicating the SDF’s insistence on allocating 50% of the oil it controls to its local government in a future unified state.

Dr. Shaar stated to Enab Baladi that the most economically important resource in Syria is oil, which is still concentrated in areas under SDF control. A committee is expected to be formed in the coming months to begin working on interlinking resources and granting the Damascus government control over oil in eastern Syria, according to a signed agreement between Abdi and al-Sharaa.

According to Shaar, doubts still linger regarding the completion of the agreement, and if relations between Damascus and Washington deteriorate, the US might pressure the SDF again to refrain from adhering to the commitments.

 

European sanctions on the oil sector have been suspended, which increases opportunities for sector reforms. However, major global companies will remain hesitant, as the sector is still sanctioned by the US Thus, lifting European sanctions on the oil sector is necessary but insufficient unless linked to the lifting of US sanctions.

Dr. Karam Shaar, Director of the Syrian program at the Syrian Observatory of Political and Economic Networks

 

The oil and gas sector remains one of the most economically promising sectors that could serve as the first driver of the Syrian economy during the reconstruction phase in the coming years, especially if the new Syrian administration successfully restores oil and gas production levels to those before 2011, meaning achieving oil production that could generate an annual revenue of up to $10 billion, based on an estimated price of $70 per barrel, according to a report by the Jusoor for Studies Center.

The need to reactivate the oil and gas sector imposes on the new administration the necessity of building trust with various regional and international powers and seeking opportunities for cooperation and investment, which aligns with the administration’s direction towards privatization and partnerships at both domestic and foreign levels. This is the path forward to overcome obstacles related to limited financing and lack of local expertise and competencies, according to the report.

In a paper on energy resources in Syria, researcher Brenda Shaffer recommended that the US support the process leading to the return of Syrian oil and gas fields to the control of the central government and that Washington work with Ankara to integrate Syria into the regional electricity and natural gas trade.

The researcher recommended launching funding from the World Bank and regional public banks for fossil fuel projects in Syria and lifting Western sanctions or granting exemptions to allow investment and trade with Syria.