By Simon Watkins for Oilprice.com |Following the sudden removal of longtime Syrian President Bashar al-Assad from office on 8 December, the new caretaker government has issued public tenders for the development of the country’s oil and oil products sector. At the same time, its caretaker Oil Minister Ghiath Diab said that Syria wants to resume major exploration and production activities for both its oil and gas operations. Given the vital geopolitical importance of the country that lies in the heart of the Middle East and has a long Mediterranean coastline, competition between the major global powers to establish a strong foothold in the state’s new political order is already hotting up. RELATED: Ukraine Welcomes Trump’s Threat to Sanction Russian Oil and Gas Even Harder
First to pay an official high-level visit to Syria was Russia, with Deputy Foreign Minister Mikhail Bogdanov arriving in Damascus on 28 January. He met with the new President of Syria, Ahmed al-Sharaa, together with his Foreign Minister Asaad al-Shaibani and Minister of Health Maher al-Sharaa. Saudi Arabian by birth, Al-Sharaa is also the emir of the radical Islamist group Hayat Tahrir al-Sham (HTS) which spearheaded the final lightning-fast removal of al-Assad. He fought for al-Qaeda in Iraq for three years from 2003 and then founded the radical Islamist al-Nusra front in 2012, after being imprisoned by the U.S. from 2006 to 2011. He is still listed by the U.S. State Department as a ‘Specially Designated Global Terrorist’ and had a US$10 million reward for information leading to his capture offered by Washington. Following a meeting in December 2024 between al-Sharaa and a U.S. delegation led by Assistant Secretary of State for Near Eastern Affairs, Barbara Leaf, the bounty was withdrawn. According to a press release from the Russian Foreign Ministry, the recent meeting between Bogdanov and al-Sharaa focused on Moscow’s ‘unwavering support for the unity, territorial integrity, and sovereignty of the Syrian Arab Republic’. It added that both parties ‘agreed to maintain bilateral engagement with a view to formalising pertinent arrangements, reflecting a mutual resolve to deepen comprehensive ties and understanding between Moscow and Damascus, including in foreign policy spheres’.
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It is little wonder that Moscow is so keen to get on the right side of al-Sharaa given that Syria is vital to its key strategic interest for three key reasons, as analysed in full in my latest book on the new global oil market order. First, it is the biggest country on the western side of the Shia Crescent of Power that Russia had been studiously developing for years as a counterpoint to the U.S.’s own sphere of influence centred then on Saudi Arabia (for hydrocarbons supplies) and Israel (for military and intelligence assets). Second, it offers a long Mediterranean coastline from which Russia could send oil and gas products – or anything else – from itself or from its allies (notably Iran) for export either into major oil and gas hubs in Turkey, Greece and Italy or into north, west and east Africa. And third, it is a vital military and intelligence hub for the Kremlin, with one major naval base (Tartus – and Russia’s only Mediterranean port), one major air force base (Khmeimim) and one major listening station (just outside Latakia).
Russia had also intended to make its Syrian client state an essentially self-financing operation, once it had fully resuscitated the country’s once-sizeable oil and gas industries. At the time civil war broke out in Syria in 2011, the country had been producing around 400,000 barrels per day (bpd) of crude oil from proved reserves of 2.5 billion barrels. Before recovery began to drop off due to a lack of enhanced oil recovery techniques being employed at the major fields – mostly located in the east near the border with Iraq or in the centre of the country, east of the city of Homs – it had been producing nearly 600,000 bpd. For the period when the largest producing fields – including those in the Deir-ez-Zour region, such as the biggest field, Omar – were under the control of ISIS, crude oil and condensates production fell to about 25,000 bpd before recovering again. Europe imported at least US$3 billion worth of oil per year from Syria up to the beginning of 2011, and many European refineries were configured to process the heavy, sour ‘Souedie’ crude oil that makes up much of Syria’s output, with the remainder being the sweet and lighter ‘Syrian Light’ grade. Most of this – some 150,000-bpd combined – went to Germany, Italy, and France, from one of Syria’s three Mediterranean export terminals: Banias, Tartus, and Latakia. Syria’s gas sector was at least as vibrant as its oil one, and less of that was damaged in the first few years of the conflict. With proven reserves of 8.5 trillion cubic feet (tcf) of natural gas, the full year 2010 – the last under normal operating conditions – saw Syria produce just over 316 billion cubic feet per day (bcf/d) of dry natural gas. The build out of the South-Central Gas Area by Russia’s Stroytransgaz – had started up by the end of 2009 and had boosted Syria’s natural gas production by about 40% by the beginning of 2011. This allowed Syria’s combined oil and gas exports to generate a quarter of government revenues at that point, and to make it the eastern Mediterranean’s leading oil and gas producer at the time.
In November 2017, a re-worked version of an original 2015 Russia-Syria Cooperation Plan was signed, encompassing not just the restoration of at least 40 energy facilities in Syria, including offshore oil fields, but a lot more as well, as also detailed fully in my latest book on the new global oil market order. For a start, focus would turn to expanding the power sector, based on from a plan signed between Syria’s then-Electricity Minister Mohammad Zuhair Kharboutli and Russia’s Minister of Energy Alexander Novak. The deal covered the full reconstruction and rehabilitation of the Aleppo thermal plant, the installation of the Deir Ezzor power plant and the expansion of capacity of the Mharda and Tishreen plants, with a view to re-energising Syria’s power grid and restoring the main control centre for the grid back to Damascus. This accorded with comments as early as the middle of December 2017 (by then-Russian Deputy Prime Minister Dmitry Rogozin, following talks in Syria with then-President Bashar al-Assad) that: “Russia will be the only country to take part in rebuilding Syrian energy facilities.” Over and above the four power plant projects that were to be optimised as a priority, the key infrastructure project was the complete repair and capacity-boosting upgrading of the Homs oil refinery (Syria’s other was then in Banias). The practical project work was led by Iran’s Mapna and Russian companies, with the initial target capacity being 140,000 bpd. Phase 2’s objective was 240,000 bpd and Phase 3’s was 360,000 bpd. The intention was that it could also be used to refine Iranian oil coming through Iraq if needed, before onward shipment into southern Europe. It is precisely this wide-ranging multi-layered energy, military, and political cooperation plan that Russia wants to re-establish with the new regime.
If for no other reason than to screw with Russia’s grand plan – a powerful enough idea in the zero-sum game of superpower politics – the U.S. and its allies have a different agenda for the country. As echoed in the December meeting between the U.S. delegation and al-Sharaa, several formerly impeccable senior security and energy sources in Washington, London, and Brussels exclusively told OilPrice.com just after al-Assad’s removal that the sudden – and otherwise inexplicable – success of the Syrian rebels led by HTS was in no small part connected to a massive surge in U.S. and U.K. support for them in the run-up to the coup. “The U.S. wanted to put Moscow’s and Tehran’s leadership on notice that Washington can easily redraw and restructure borders and regimes in not just the Middle East but also in Eastern Europe, if it wants to,” a senior security source in the European Union (E.U.) told OilPrice.com. “As he’s [al-Assad] gone now, I can’t see either Washington sitting back and allowing anyone to benefit from this other than the U.S., and if the reconstruction is done in a gradual and inclusive [with Syria’s principal former rebel groups], the outcome may be better than seen elsewhere in the region,” he concluded.
By Simon Watkins for Oilprice.com
