Phil Sands, Foreign Correspondent
- Last Updated: April 15. 2010 10:36PM UAE / April 15. 2010 6:36PM GMT
Shell’s deputy general manager in Syria, Ghaleb Sleiman, is just such a character. The Anglo-Dutch oil giant is in the final stages of exploratory drilling here and, by the end of the month, expects to know whether it has made a profitable discovery.
“We have to complete the drilling and based on the outcome of that we will make our decisions,” he said. “We are waiting with interest to see what the indications are, oil or no oil.”
It is not just Shell’s shareholders keeping their fingers crossed that the company’s engineers have struck oil. The Syrian government, still under US economic sanctions and struggling to plug budget deficits, could also use the revenues generated by a big find.
For decades oil has been a foundation stone of the national economy, bankrolling a massive system of state subsidies on everything from bread to winter heating fuel. Those subsidies have been highly popular among Syria’s working class majority and, as such, a crucial tool of domestic political policy.
But Syria’s known reserves are fast drying up. According to government estimates, crude oil production could fall by as much as 34 per cent over the next 15 years.
Steps have been taken to limit the fallout of dwindling supplies, and free-market orientated reforms have made the economy far less dependent on oil than was once the case. However, oil still accounts for 22 per cent of Syria’s GDP, making it a major component that will not be easily replaced.
In a strategic plan unveiled in February, Damascus made clear its aim is to manage the decline as efficiently as possible, extracting as much from the emptying reservoirs as it can while trying to avoid any sudden cutbacks in production. If properly handled, they expect crude oil output may fall by nine per cent by 2025.
Any new oil finds that can be made in the meantime would help smooth Syria’s economic transition. With that in mind, last week Sufyan al Allaw, the minister of petroleum and mineral resources, invited tenders from international energy firms to explore eight new blocks of territory covering some 60,000 sq km.
“Various companies are still looking for oil here and some have recently been successful,” said Shell’s Mr Sleiman. “Some new discoveries would certainly help offset the falling output of some of the mature fields.”
In one of the recent successes, the oil company IPR discovered three commercially viable sites in the eastern desert region, near the Euphrates River as it heads towards Iraq. The figures involved are small – they began by producing 3,000 barrels of oil per day, about one per cent of Syria’s total output – but it has given rise to some optimism there is still new oil to be found.“We’re now running three new wells on two fields, it’s a viable discovery,” said Mohammad Shammat, an IPR official. “This is not an easy business, it takes a lot of work to find oil but we think there is a promising future here, there is oil out there.”
That analysis is not universally shared. “We’re not expecting any significant finds, there are no big fields out there,” said a manager with a major international oil firm working in Syria, on condition of anonymity. “There might be some gas reserves but, in my opinion, not much oil worth talking about.”
As part of its strategic resources plan, the Syrian government did lay much greater emphasis on exploiting natural gas, in a recognition that the days of pulling easy oil out of the ground are over.
A new gas plant, a joint project between Petro-Canada – recently renamed Suncor – and the Syrian government is expected to begin production this month.
But even planned increases in gas output will fail to match the growing demands of an energy hungry nation, and Syria continues to face a shortfall in electricity production. Domestically produced oil and gas are not likely to provide a solution to that problem.
“A lot of Syria is virgin territory for oil and gas exploration and we do expect there to be more discoveries,” said Mohammad Karkoush, editor of Syria Oil, an independent website focused on the industry. “The key question is how big those discoveries might be, and no one really knows the answer. But we do know we are not talking about huge oil or gas, we’re not going to find anything like the enormous reserves they have in Iraq.”
Rather than banking on new oil or gas finds, the Syrian authorities are really looking to neighbourhing Iraq to help them balance their books, according to one Damascus-based oil analyst.
“Syria’s own resources are important, but they are actually gambling on Iraqi oil,” he said, on condition of anonymity because of the sensitive nature of his remarks. “If Iraq starts developing its big fields, it is going to need to export oil and gas to Europe and it makes sense for Syria to be the transit route.”
Last year Damascus and Baghdad agreed to extensive strategic co-operation, including on natural resource development, but that was torpedoed by a series of explosions that Iraqi prime minister Nouri al Maliki blamed on Syria-based insurgents, allegations Syria denied.
Relations between the two countries have since frozen, although that may be set to change with a new Iraqi government to take office following the March 7 elections. Syrian officials have certainly expressed confidence that will be the case.
“I am sure the relationship between both governments, now and into the future, will become better and better,” said Ali Abbas, director general of Syria’s general petroleum company, in a recent interview with Syria Today magazine.
“I am sure that we will create a very co-operative relationship. I don’t have the details of what it will look like yet, but I’m sure it will happen.”
Source: http://www.thenational.ae/apps/pbcs.dll/article?AID=/20100416/FOREIGN/704159895/1135
Comments
Post a Comment