Syria: Oil and gas thoroughfare plan now in jeopardy
Arab League sanctions on Syria threatens its drive to become a thoroughfare for Middle East oil and gas. As recently as July, Syrian officials signed an early-stage agreement with Iran and Iraq for a US$10 billion (Dh36.73bn) pipeline that would transport Iranian natural gas through both countries to Europe.
That followed a preliminary deal between Syria and Iraq to repair an unused pipeline for Iraqi crude oil and build two new ones, with a combined capacity of 2.75 million barrels per day (bpd).
The Arab League sanctions against the Syrian regime puts plans between Syria and Iraq in question. Both are members of the league, although Syria has been suspended. Opening its borders to major pipelines was part of Syria's strategy for broadening its economy, which relies on oil for most of its export income.
Oil production declined from 546,785 bpd in 2000 to 400,998 bpd last year, according to the US energy information administration, and the few foreign investors left include France's Total as well as Chinese state-owned firms.
Syria has had an increasingly hard time selling the less desirable crude from ageing fields, and an oil embargo issued by the EU in September deprived Syria of a core customer. Meanwhile, other international sanctions have stifled development of refining oil, leading Syria to spend $1bn - about 6 per cent of its GDP - on fuel imports in the first three months of this year alone. "It has both too much and too little oil at the same time," said John Tottie, an analyst with HSBC in Riyadh. "Syria depends on trade to balance this equation, yet sanctions appear to close the door."
Last week Syria was reported to have shipped 600,000 barrels of crude oil to its political ally Iran. That country's state oil company dismissed the report.
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