Syria’s oil industry was once booming. Could it be again?

Oil production began in earnest in May 1968, with the first barrel arriving at the port of Tartous from a pumping station in Tal Adas, north-eastern Syria, via the Homs refinery.

In 1974, the Syrian Petroleum Company was established, along with other specialised companies responsible for refining and transportation, all under the umbrella of the Ministry of Oil and Mineral Resources.

The Syrian Petroleum Company oversaw all aspects of the oil and gas extraction industry, generating more than 50% of the country's national income.

Syria's oil industry has seen various partnerships between local companies and foreign entities. In 1980, the Al-Furat Petroleum Company was established, with the Syrian state holding 65% of its shares and foreign companies led by Shell owning 35%.

The same year, Petro-Canada (acquired by Canadian major Suncor Energy in 2009) became a partner in the Al-Shaer field and established a gas plant in Al-Furqlus.

In the early 1990s, French company Total began operations in Syria but withdrew due to bilateral strain. Total returned from 2007-11, alongside other Western companies, but American companies' presence has declined since the 1980s.

Fields and pipelines

The most significant oil fields are the Al-Omar and Al-Tanak fields in the eastern countryside of Deir Ezzor and Al-Hasakah in north-east Syria. Al-Omar produced 80,000 barrels per day (bpd), while Al-Tanak produced 40,000 bpd until the end of 2010.

Additionally, the Al-Ward and Al-Taym fields produced 50,000 bpd each. Other notable fields include the T2 station on the Iraq-Syria oil pipeline, Al-Jafra, and Conoco.

In the southern countryside of Al-Hasakah Governorate, the Al-Suwaydiyah and Al-Rimelan fields are significant. The former has 1,322 oil wells, the latter 25 gas wells. Their combined production until the end of 2010 was approximately 200,000 bpd.

Additional fields are located near the Markada and Tishreen Kabibiya areas in the western countryside of Al-Hasakah, plus small oil wells in Al-Raqqa Governorate.

In central Syria, notable fields include Al-Shaer in eastern Homs, producing three million cubic metres of gas per day, making it one of Syria's most significant fields.

The Palmyra region's fields in eastern Homs, including Al-Hail, Arak, Hayyan, Jahar, Al-Mahr, and Abu Rabah collectively produce 9,000 bpd.

Syria's oil production surged in the 1980s, reaching a peak of 600,000 bpd, but this had dropped to 400,000 bpd by 2010. The outbreak of protests and war in 2011 and the imposition of sanctions meant that foreign oil companies to be unable to operate.

They declared force majeure (literally 'greater force', meaning events such as war beyond their control that prevent them from operating) and suspended their contracts with the Damascus government, which further impacted oil production. 

Current production is estimated to be around 85,000 bpd with about 90% of that produced east of the Euphrates, meaning under the control of the SDF.

Battling for control

Various armed groups and factions, including Islamic State, took advantage of the state's weakness and seized control of a substantial portion of Syria's oil resources, but American military power gradually helped shrink IS territory and control.

The control over Syrian regions by groups supported by foreign countries has shifted significantly in the years since 2011, as has control of the country's natural resources.  

After Russian military intervention in Syria in late 2015, Russian companies signed contracts with Syrian entities to invest in the oil and gas sectors.

Damascus contracted with the Evro Polis company, linked to Russian businessman Yevgeny Prigozhin, the founder of the Wagner mercenaries, to protect oil and gas facilities, including Suncor's Al-Shaer field, in exchange for a 25% cut of the revenues.

Meanwhile, Washington chose the SDF as their partner to "protect" the oilfields east of the Euphrates. This led to several high-profile battles and resulting bloodshed, with up to 2,500 Russian fighters in Syria, before their transfer to Libya and Ukraine.

In early 2018, Wagner elements launched an attack on a gas production facility belonging to the Conoco company (currently closed) east of the Euphrates, an area under SDF control. The US bombed the assailants, killing 200 Wagner fighters.

In the summer of 2014, there were a series of fierce battles between IS and Syrian government troops over Suncor's Al-Shaer Gas facility, with around 500 deaths, casualties, and kidnappings, including dozens of oilfield workers massacred.

Families of the victims now want compensation from Suncor. The company is understood to feel that it does not have any moral or ethical obligations to compensate families, even though it continues to hold the license.

America and the SDF

The US-backed SDF controls a quarter of Syrian territory, including the resource-rich area east of the Euphrates, which holds 90% of Syria's oil and more than half of its natural gas fields, as well as infrastructure owned by foreign companies through contracts signed with Damascus.

The SDF's pumping and production of the oil is illegal and contrary to international sanctions but nevertheless continues, with ordinary Syrians yet to benefit.

Because of the sanctions, this oil cannot be sold on international markets so is sold on the black market at a fraction of its real value, reported to be around $15 per barrel.

On 15 August 2023, officials from the Autonomous Administration of North and East Syria (the political wing of the SDF) claimed they controlled less than half the wells and fields in its areas of influence.

They denied stealing Syrian oil or monopolising resources, saying a portion of the production is sold to traders linked to the Damascus regime at prices significantly lower than market rates. Again, the average Syrian does not benefit.

Gulfsands, a UK company which still maintains an interest in Block 26, reported that since 2017 entities affiliated to the SDF had stolen an average of around 20,000 bpd, in total worth around $3.4bn by the end of 2023.

In 2019, former US President Donald Trump decided to withdraw US forces from the area near the Syrian border with Turkey, east of the Euphrates, which spooked the SDF, who are targeted by Turkish forces.

After lobbying, he relented and agreed to keep 900 US soldiers in Syria, saying: "I don't think it's necessary, other than we secure the oil." A small number of troops would also remain in southern Syria, he added.

Enter Iran and Russia

Following interventions by Iran and Russia in 2015, the Syrian regime regained control of some small oil and gas fields in the central region, notably Al-Shaer, Al-Hail, Arak, Hayyan, Jahar, Al-Mahr, and Abu Rabah in the Palmyra region.

But the SDF still controls the significant oil and gas fields, including Al-Rimelan (where SDF commander Mazloum Abdi is based) and Al-Jubaysah in Al-Hasakah, as well as Al-Omar, Al-Tanak, and Conoco in eastern Deir Ezzor Governorate.

Since 2017, Iran has maintained control over oil wells in the Albukamal countryside, within its area of influence, but Iran-backed militias like Iraqi Hezbollah and Fatemiyoun, briefly took control of oil and gas fields in Deir Ezzor and Raqqa's countryside.

Pro-Russian elements, backed by Russian military police, intervened to expel the Iranians. Russian-controlled areas now include Al-Thawra, Al-Ward, and Al-Taym oil fields, and the Tuwainan gas fields, in the countryside of Deir Ezzor and Raqqa.

The Russian-backed forces, including the remnants of the now-defunct Wagner Group and the Fifth Corps (affiliated with the Russian Hmeimim base in Latakia), have effectively replaced Iranian control in these areas.

Losses and adaptations

The Syrian regime sees itself as a victim in all this. Former Syrian Minister of Oil Bassam Tohme said the state's oil losses since 2011 were $91.5bn.

Severe fuel shortages now affect government-controlled areas, leading Damascus to accuse the SDF of theft with American connivance, as the oil is smuggled out of Syria via the semi-autonomous Kurdistan Region of Iraq.

The government now has to import oil from Iran through credit lines, while some is sourced from the SDF at lower rates through intermediaries.

These middlemen, such as businessman Hossam Katerji, buy the oil from the SDF and deliver it to government-controlled areas, a practice that went on during Islamic State's control of the wells. Katerji gained prominence during the war by dealing with IS.

Damascus is painfully aware of the lost revenue that has flown from lost control. It translates to a daily loss of $6.4m, assuming an oil price of $80 per barrel, or $15bn since 2017.

In April 2021, during a session of the General Federation of Trade Unions, Prime Minister Hussein Arnous said Syria's daily oil requirement was 200,000 barrels "but our production is only 20,000 barrels, which are refined at the Baniyas Oil Refinery".

The reliance on Iranian oil through a credit line increases Syria's dependence on Tehran, which will be a discomforting development for the likes of Ankara and Washington.

Seeking a solution

The status quo does nothing for ordinary Syrians, many of whom live in dire poverty. Oil was one of the few major sources of revenue that the country had. There are now concerns about extensive environmental damage caused by unqualified SDF operators.

The big Western oil companies have wiped their hands of Syria, citing contractual protections, but if the political and security environment improved, so too might the business environment, allowing some of the big oil majors to consider returning and investing, with a major share of the revenue going to the Syrian people.

The SDF cannot rest easy, since it faces threats. Oil fields in SDF-controlled areas have increasingly become targets for IS militants, as have oil tanker convoys, with a noticeable uptick in attacks recently, after several fields were set ablaze. Meanwhile, Turkish threats continue. Ankara sees the SDF as a front for terrorists.

The terrible loss of life ten years ago this month, in Al-Shaer field, is a vital reminder that a solution must be found, one that has the buy-in of local communities.

Syrian government forces, backed by the Russian army, now controls the Al-Shaer oil field, and the Syrian Ministry of Oil and Mineral Resources has fixed the gas pipeline connecting the field to the Ebla gas plant, which was previously attacked.

According to company filings, Suncor continues to hold its interest in Al-Shaer.

The Syrian Petroleum Company and its subsidiary Al-Furat Petroleum still operate, with work concentrated in the small number of fields still under government control.

Sources close to Suncor told Al Majalla that there are still government employees and technicians affiliated with these companies who continue to work in oil and gas fields outside of government control.

An engineer noted that, despite all the security and political changes in Syria since 2011, there has been no change in the operations of these companies.

Thaws change things

Most think talk of returning foreign oil companies to Syria is premature amid speculation that a Trump White House would conclude a US withdrawal from the region.

Yet even if the Americans pull out of Iraq, and even if Trump were to win, it is still unlikely that the US would leave north-east Syria, where most of the oil and gas fields are located, or the Al-Tanf area in south-eastern Syria.

In recent weeks, the US-led international coalition against IS has deployed significant additional reinforcements, including air defence systems, to its bases in northern and north-eastern Syria, to defend against attacks from Iran-backed militias.

If Vladimir Putin succeeds in ending the feud between Turkey's Erdogan and Syria's Assad, two men who have ruled their countries for more than two decades, it could alter the political and security terrain in the north.

Arab countries support the push, in part because working relations between Turkey and Syria could help reduce Damascus's reliance on Iran.

Fidan concurred, saying "one of the goals of (a Turkey-Syria alliance) is to limit Iran's influence". The US also wants its NATO ally Turkey to normalise relations with Syria.

Analysts say that if Iran is sidelined, "it could lead to a convergence of Turkish, Arab, and American interests" in northern and north-eastern Syria, with the US presence there thought to be unsustainable in the long run.

Experts think that if there is a Syrian-Turkish reconciliation, the Kurds will likely gravitate towards Syria, and the US will encourage this shift.

Russian interest in Syria's north-eastern oil and gas would increase if US troops withdrew, given that Russia is already sanctioned by the West. Until sanctions on Syria end, however, it is difficult to foresee European commercial interest.

In summary, if the conditions are right, Syria could once again have a thriving oil and gas industry, that could generate billions of dollars per year for humanitarian aid and early recovery but this will take political will, compromise, and transparency, and might also involve Moscow, Washington, and Ankara.

Back, then, to Turkey's Foreign Minister Hakan Fidan, speaking positively about working with Damascus to "liberate" Syria's oil fields. Alas, that is only the start of it.