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Syria Energy and Natural Resources
Although Syria's crude oil reserves were small and production
minor by Arab and international standards, in the 1970s and 1980s
petroleum extraction played a vital role in Syria's economy,
generating much-needed foreign exchange. However, the size of
Syria's proven crude oil reserves remained secret. In 1977 United
States government figures placed Syria's proven oil reserves at
2.2 billion barrels. International sources estimated that Syria's
crude oil reserves had fallen to 1.5 billion barrels by the end
of 1983, indicating a life span of no more than twenty-years at
1984 production levels. Some publications listed substantially
higher reserves (perhaps reflecting total rather than recoverable
reserves) that appeared large in relation to Syrian production
data in the 1980s.
Although Syria awarded its first oil concession to foreign
firms in the 1930s, it did not emerge as an oil producer until
the late 1960s. In 1956 an American company discovered oil at
Qarah Shuk (Karachuk) in the northeast near the Iraqi border. In
1959 a West German firm discovered the Suwaydiyah field, located
about fifteen kilometers south of the first oil discovery. The
Syrian government nationalized the oil industry in 1964, and in
the late 1960s the Syrian General Petroleum Company (SGPC),the
national oil company, brought the two fields on stream with
Soviet assistance. Although Suwaydiyah initially averaged 20,000
barrels per day (bpd) and Qarah Shuk produced 30,000 bpd, the oil
from both fields carried American Petroleum Institute (API)
quality ratings of 25.5 and 19, respectively. Both had high
sulfur contents, confirming the poor quality of Syrian oil. Syria
became an oil exporter in 1968 with the completion of a 663-
kilometer pipeline to transport oil to a terminal at Tartus on
the Mediterranean coast. Both the Qarah Shuk and Suwaydiyah
fields continued to produce oil into the 1980s.
Oil exploration intensified in the 1970s. SGPC discovered the
Rumaylan field, about ten kilometers southwest of Qarah Shuk,
which had produced over thirty-nine million barrels of oil by
mid-1984. Smaller fields also produced minor amounts of heavy
crude in the 1970s. The Jubaysah field, located about 150
kilometers southwest of Qarah Shuk, came on stream in 1975. It
had a 40.2 API crude oil rating but a 0.6 percent sulfur content,
suggesting that Syria might look forward to discovering major
quantities of light crude. In 1974 the government eased the way
for the return of foreign contractors, granting a Romanian
company a production-sharing concession. Western companies
returned in 1977 when Pecten, a Shell subsidiary, won a 20,000-
square-kilometer exploration concession in northcentral Syria.
The Syrian American Oil Company and Samoco, a subsidiary of the
American-based Coastal States Gas Corporation, won the 15,570-
square-kilometer concession to exploit the resources of Dayr az
Zawr Province in 1977. Deminex, a West German company, joined the
group in 1979. In 1983, after Samoco dropped out, Deminex joined
Pecten in an expanded concession of 21,800 square kilometers.
Pecten held 31.25 percent, Royal Dutch Shell 31.25 percent, and
Deminex the remaining 37.5 percent. Chevron, Pennzoil, and
Marathon Oil also won exploration concessions in the 1980s.
Marathon's two wells at Sharifah, nears Homs, produced promising
results for gas exploitation from 1983 to 1985. Syria's state-
owned oil company also continued exploration and drilling to
bring the small, newly discovered Qayrik, Wahab, Sa'id, and As
Safih fields on stream by the mid-1980s. The 1984 discovery of
large quantities of light, sweet crude oil at the Pecten
consortium's Thayim field near Dayr az Zawr gave a much-needed
boost to the Syrian oil industry and economy. The Dayr az Zawr
oil, ranked at API 36 with a low sulfur content, offered the
prospect that Syria could cut by up to $200 million its own
imports of light crude oil required for use in domestic
refineries in the 1990s. Early production estimates confirmed an
initial output of 50,000 bpd when the Thayim field came on stream
in late 1986. In 1985 the Syrian General Petroleum Company and
Pecten formed the Furat Oil Company to operate the concession
with the state. In 1986 Czechoslovakia's Technoexport completed a
ninety-two-kilometer spur line linking the Thayim field to the
currently unused Iraqi-Syrian pipeline. Syrian government
officials estimated that production levels at Dayr az Zawr would
rise to 100,000 bpd in 1988.
Syria's oil production remained virtually static in the mid-
1980s. The IMF put production at 162,000 bpd for 1985
(see table 10,
Crude Oil Production, Appendix). Excluding the new Dayr az Zawr
discovery, however, Syria claimed production of approximately
170,000 bpd in 1985, blending one-third of its heavy sulfurous
domestic crude with two-thirds imported light oil. Domestic
consumption of oil products averaged around 190,000 bpd in the
mid-1980s, with up to 120,000 bpd of this total coming from Iran
in 1985. Oil contributed about 10 percent to Syria's GDP through
the 1980s. Following the rapid rise of world oil prices in 1973,
oil became Syria's chief source of foreign exchange. The value of
Syria's oil exports rose from LS291 million in 1973 to LS1.6
billion in 1974 and almost doubled to LS2.6 billion in 1976,
accounting for 63 percent of total exports. In 1979 the total
export value of oil reached 68.9 percent before declining to 51.4
percent in 1982 and rising slightly to about 55 percent in 1984
and 1985. However, Syria's oil and petroleum products trade
surplus of the late 1970s (and 1980) turned into a deficit in the
1980s. The 1980 surplus of LS2.42 billion fell to a deficit of
LS767 million in 1984, making Syria's ability to boost domestic
production and reduce oil imports an economic imperative of the
1990s.
Since 1982, when Syria closed its oil pipeline from Iraq and
stopped purchasing Iraqi oil as a show of support for Iran in the
Iran-Iraq War
(see
Regional Foreign Relations
, ch. 4), Iran has supplied
large quantities of oil to Syria on concessionary terms and as
outright gifts. In 1984 Iran provided Syria with 6.4 million tons
of oil, discounted by US$2.50 per barrel, and 1.6 million tons
free, for a total of 8 million tons. In 1985 Iran supplied Syria
with six-million tons of oil, including a one-million ton gift.
However, Iran interrupted supplies in October 1985 because of
Syria's estimated US$1.5-billion payment arrears and price
disagreements. Syria turned briefly to Arab suppliers on the spot
market, further depleting foreign exchange reserves, before Iran
negotiated a new agreement with Syria in July 1986, guaranteeing
the supply of 2.5 million tons of oil between October 1986 and
March 1987.
Until oil prices jumped in the early 1970s, Syria earned more
from the international pipelines that crossed its territory than
from domestic oil production. In the early 1950s, the Tapline
(Trans-Arabian Pipeline)--running from the oil fields in Saudi
Arabia across Jordan and the southwest corner of Syria to a sea
terminal on the Lebanese coast--was completed. Capacity was 25
million tons of crude oil a year. Syria earned small amounts of
foreign exchange from transit fees (reportedly US$2.8 million in
the mid-1970s) for the oil crossing the country via Tapline.
Various interruptions of pipeline operations, escalating transit
fees, and the reopening of the Suez Canal in June 1975 reduced
use of Tapline in the 1970s. Pumping via Tapline was suspended in
1977, while Syria negotiated a new arrangement with Lebanon. In
1987 observers were pessimistic about the future uses of Tapline.
The larger and more important pipeline carried crude oil from
the former Iraq Petroleum Company (IPC) fields across Syria via
Homs, after which the pipeline branched, with one spur leading to
Tripoli in Lebanon and the other spur leading to the Syrian
terminal at Baniyas. The IPC pipeline (actually three separate
lines) had a capacity of about 55 million tons a year in the
1970s. The pipeline began operation in the early 1950s, providing
transit fees as well as the crude that was refined at the Homs
refinery into products for Syrian consumption. In the 1960s,
Syria frequently used its control at the pipeline for political
leverage over Iraq, which depended on the pipeline across Syria
until the late 1970s, when its pipeline through Turkey began
operation.
Transit rates increased substantially after 1966. In the
early 1970s, earnings from the pipelines were more important than
direct taxes and one of the most important sources of budget
revenue. These earnings peaked in 1974 at LS608 million and were
estimated at LS575 million in the 1975 budget. In April 1976,
however, Iraq cancelled the transit agreement because of price
disputes and cut off oil supplies to Syria. Saudi Arabia supplied
oil for the Homs refinery until February 1979, when Iraq and
Syria negotiated a new agreement, setting transit fees at $0.35
per barrel compared to $0.45 when the pumping stopped. In 1979
Iraq pumped ten million tons of oil through the pipeline,
approximately two-thirds less than the average amount pumped
between 1971 and 1976. The outbreak of the Iran-Iraq War in
September 1980 again interrupted pumping, but it put Syria in a
stronger position vis-a-vis the pipeline, given Iraq's need for
revenues to finance the war. Although pumping resumed in February
1981, Syria argued that the pipeline cost more to operate (US$31
million in 1981) than it brought in transit fees (US$25.7 million
in 1981). In April 1982, after negotiating an agreement to
purchase oil from Iran, Syria closed the pipeline to Iraqi
petroleum exports.
By the mid-1980s, Syria had two domestic pipeline systems and
two refineries. A crude oil line, with a capacity of fifteen
million tons a year in 1977, led from the fields in the northeast
to a sea terminal at Tartus, with a spur to the refinery at Homs.
Three pipelines for refined products from Homs (each with a
capacity of 350,000 tons a year) led to the major consumption
centers of Damascus, Aleppo, and Latakia. In 1984 the Syrian
Company for Oil and Transport (state-owned) carried 9.5 million
tons of crude through its pipeline, up from 8.9 million tons in
1983. In 1979 the new Baniyas refinery was also connected to the
domestic crude oil and products pipeline system.
The refinery at Homs was completed in 1959 and began
processing Iraqi crude oil for local consumption. In 1977 the
refinery's capacity stood at about 2.7 million tons, but after
the sixth planned expansion in 1985, its capacity doubled to 5.4
million tons per year. The US$143-million project contracted to
Czechoslovakia's Technoexport included the construction of a
480,000-ton-per-year hydrogenation unit, a 380,000-ton-per-year
catalytic reformer, and two steam-and power-generating units.
Four hundred Syrian workers received training in Czechoslovakia
in 1985 in connection with the sixth expansion of the refinery.
The seventh expansion of the refinery, scheduled to be completed
in the late 1980s, involved the construction of a 100,000-ton-
per-year base lube oil complex located at the Homs refinery. The
Homs refinery used a blend of crude oil in the 1970s, mixing
light Iraqi oil with heavy Syrian crude. Israeli bombing raids on
Syria during the October 1973 War severely damaged the operating
capacity of the Homs refinery, and the desulfurization unit was
not fully repaired until 1976. After 1982 Syria used imported
Iranian oil with domestic products at the Homs refinery. In 1985
it processed 5.064 million tons, up from 5.197 million tons in
1984.
The Baniyas refinery was completed in 1979 at a cost of LS1.1
billion. The refinery's maximum capacity was six million tons. In
its first year of production, the refinery produced only 1.7
million tons, but this figure more than doubled in 1982 to 4.4
million tons. In 1984 and 1985, the refinery operated at 95
percent of capacity, refining approximately 5.7 million tons of
crude oil for an annual production value of LS4 billion.
Principal products included high octane and regular gasoline,
butane gas, jet fuel, asphalt, and sulfur. The plant employed
2,250 workers in 1984, including 73 Romanian technicians--a sharp
decline from the 450 Romanian technical advisers who assisted
operations at the Baniyas refinery in 1982.
Syria's natural gas was discovered in conjunction with oil-
exploration operations in the northeast part of the country. In
1984 proven gas reserves were estimated at 98.8 billion cubic
meters with associated gas reserves of 33.3 billion cubic meters.
Although into the 1980s most natural gas was flared, Syria began
exporting small quantities of liquified petroleum gas (LPG) in
late 1981. Marathon Oil made two promising gas discoveries in
1982 and 1985, finding a gas potential of 450 million cubic
meters a day in 1982 at Sharif-2 and 400 million cubic meters a
day at Ash Shair I. The economic viability of Marathon's gas
discoveries combined with uncertain market forces to cloud future
exploitation of these resources. In 1982 Syria awarded major
contracts to Technoexport of Czechoslovakia to build a gas
treatment plant at Jubaysah and a gas transmission line to Homs
for use in the Homs ammonia-urea plant. France also began
construction on a gas treatment plant at Rumaylan.
Phosphate was the country's other major mineral resource. The
government claimed reserves of one billion tons. The first
government-operated mine near Tadmur (Palmyra) began producing in
1971, and two others began operating in 1974. Syrian phospate was
low grade (about 30 percent concentration) and high in moisture.
Installation of a drying plant in one government-run mine in 1978
helped improve the quality and quantity of output. Production
grew from 800,000 tons in 1978 to 1.5 million tons in 1984, but
fell slightly to 1.3 million tons in 1985. Syria exported about
two-thirds of its phosphate in the 1980s, largely to East
European countries as part of barter arrangements concluded
between the governments. Although Syrian government officials
anticipated that output would triple by 1988 to five million tons
and by 2000 equal the output of Morocco, the world's largest
producer, production levels have remained well below projected
targets. In 1981 Syria's giant triple super phosphate (TSP)
plant, built by Romanian contractors at Homs, began production
with a capacity of 450,000 tons of TSP, and 800,000 tons of
phosphate and phosphoric acid. Syria's production of phosphatic
fertilizer more than doubled from 1981 to 1984, rising from
68,333 tons to 191,176 tons.
The other products of the extraction industries were minor.
Natural asphalt was extracted at a coastal site and in the
central part of the country. In 1976 production amounted to
125,000 tons--a tremendous jump from the 31,000 or less produced
in 1975; however, by 1984 production had declined to 52,000 tons.
Pure rock salt deposits, totaling over 100 million tons, existed
northwest of Dayr az Zawr. Expansion of the mine facilities in
the early 1970s raised the potential capacity to over 250,000
tons a year, but production hovered around 50,000 tons through
the mid-1970s. Production peaked at 102,000 tons in 1982, but
fell back to 38,000 tons in 1984. In addition, construction
materials (sand, gravel, stone, and gypsum) were mined in various
parts of the country. In 1986 Syria signed an agreement with
Turkey establishing joint ventures for mineral exploration, and
Soviet and Polish scientific missions discovered sizable iron ore
deposits near Az Zabadani and Tadmur. In late 1986, the
government also announced the discovery of significant quantities
of diamonds.
Data as of April 1987
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