The spark of the civil war in Syria started in March 2011. The petroleum sector (oil and gas) incurred its share of the devastation that hit the country since the beginning of the uprising. The Syrian Minister of Petroleum said in October 2012 that the direct and indirect losses in the oil sector to date was estimated at $2.9 billion, mostly as a result of export losses following the imposition of a Western ban on Syrian oil exports, the overwhelming majority of which went to the European market. There are, of course, also the losses resulting from the destruction of infrastructure such as railways, oil pipelines, and refineries. According to the latest report issued by the Syrian government, the value of these losses until the end of October 2012 was estimated at $220 million, including $146 million as a result of the devastation in the electricity sector and more than $ 70 million in losses in oil infrastructure. Of course, these are only preliminary figures, and only a part of the long series of losses in this vital sector. The experiences of Middle Eastern countries that were recently blighted by wars and embargos, especially Iraq, Iran, and Libya, indicate that chaos affects the petroleum sector for years after the end of hostilities and embargos, with militias taking over oil facilities and production suffering huge setbacks, as is the case in Libya and has been gradually the case in Iran: In the latter, the Revolutionary Guard took over the petroleum sector, controlling and manipulating contracts without accountability or transparency to speak of. Iran could also not restore its previous oil output levels, while corruption and blatant theft, in addition to the exodus of engineers and national cadres, has severely damaged one of the most important sectors in neighboring Iraq. There are also undeclared losses with geopolitical dimensions. Indeed, some Syrian oil ministers in the past few years tried to turn their country into a transit hub for oil bound to international markets, with the country's strategic location in mind. But these attempts were undermined by the presidency's belligerent policies, which adversely impacted the country's credibility. Though the oil ministers' attempts to achieve this goal continued, the experiences of some exporting countries with Syria were not encouraging at all. To be sure, Damascus linked its transit policy to its regional policy, meaning that the Iraqi pipeline carrying oil to the European markets through the Mediterranean had to be closed in the early 1980s, with the eruption of the Iraq-Iran war. In the past two years, Syria proposed transit projects, but as a result of their obvious political nature, it is unlikely that they will be implemented. A tripartite agreement was signed among Iran, Iraq, and Syria in May 2011, which on the surface aims to export Iranian gas through Iraq to Syria. International oil experts believe that the real aim of the pipeline, if ever built, is to act as a first step towards exporting Iranian gas to Europe. However, since Europe is taking part in the oil embargo on Iran, it is not expected that the pipeline will be built, and indeed, no part of it has yet been constructed. There is also an agreement for the construction of two pipelines to transport crude oil from Iraq to Syria, as well as a third pipeline for natural gas. These pipelines are important economically and strategically to Iraq, especially if Iraq decides to export gas from the Okaz field in the west of the country, to avoid repeated attacks on its northern Turkey-bound pipelines, as well as the export of gas to Europe via the Arab gas pipeline that transports Egyptian gas to Europe via Syria and Turkey. Since there is a shortage in Egyptian gas supplies, Iraqi gas can compensate for this shortage. Proven Syrian crude oil reserves are estimated to be in the vicinity of 2.4 billion barrels. Before the conflict erupted in 2011, output was about 330 thousand barrels per day. Domestic consumption before the war was about 258 thousand barrels per day. This data indicates that reserves declined in recent years from the level of 2.4869 billion barrels, as no new reserves could be discovered. The decline in the reserves was accompanied by a significant decrease in production, with output peaking at 595 thousand barrels per day in 1995. Production began to decline steadily since then, down to 330 thousand barrels per day in early 2011. Syria was able to hit this level by increasingly producing heavy oil (Suweidaa crude) instead of its depleting light oil. Available data indicates that production decreased during the war to about only 153 thousand barrels per day in October 2012. The major problem experienced by the country before the war was the decrease in oil production and increased consumption, which means that the government had to import fuel to supply the local market, or convert the largest number of power plants to use gas, and this is what happened. In 2007 and again in early 2011, Syria tried to begin exploration in offshore areas in line with neighboring countries in the eastern Mediterranean that had discovered gas. But no agreement was concluded with international oil companies so far. Negotiations were held with two foreign companies in 2007 without results. The licensing round launched in March 2011 also failed to attract companies due to the start of the conflict and the Western oil embargo. Meanwhile, Syrian gas reserves are estimated to be around 6.99 billion cubic meters, mostly in the form of associated gas. It is worth noting that there have been no discoveries to corroborate the rumors that circulated in Arab circles during the Syrian war, about mega gas discoveries in Syria. It is as of yet unknown what the nature of the looming U.S.-led military strike on Syria will be. Will it be limited to targeting military facilities and bases, as the bills before Congress suggest, or will it target infrastructure, under the pretext that it supports the Syrian war effort, as happened in Iraq when refineries and pump stations were bombed? Or will the scope of the strike be expanded to include non-military targets, as is always possible in wars, despite denials in official U.S. statements? Syria will face immense challenges in rebuilding its oil industry. It will rebuild it with time, but at great expense. Although Syria is not a major oil producing country, it can at least build on what has been discovered so far, and what future discoveries would offer. There is another petroleum opportunity for Syria, other than exploration and development, in benefiting from oil and gas transit operations, as Turkey has been doing. But the primary condition for transit operations is not to breach signed agreements, as well as stability, and ensuring the safety of oil supplies. * Mr. Khadduri is a consultant for MEES Oil & Gas (MeesEnergy)
