Syria signs offshore oil and gas exploration deal with Russia

The offshore exploration deal signals that Russia is confident that its relations with Syria will not change in the near term.

al-monitor Syrian Oil Minister Suleiman al-Abbas (right) and Russian Ambassador to Syria Azmatullah Kulmohamedov talk to the media in Damascus after signing a contract between the Syrian government and a Russian company to explore oil and gas off Syria's coast, Dec. 25, 2013. Photo by REUTERS/SANA/Handout.

Topics covered

syrian-russian relations, oil exploration, oil contracts, oil & gas, mediterranean sea

Dec 27, 2013

Russia signed a deal with Syria to explore Syrian offshore oil and gas. The deal’s benefits are more than economic. It was signed a month after Syria encouraged its Russian ally to explore in Syria’s safe waters and break the oil sanctions imposed on Syria.

On Dec. 25, Damascus and Moscow signed a deal to explore for oil and gas in Syrian territorial waters, where the size of the reserves are undetermined. The two sides agreed on a 25-year deal, funded by Moscow, which will recoup its costs if oil is found, as is likely.

The deal on “oil exploration, development and production in Syrian territorial waters” was signed at the Ministry of Oil and Mineral Resources in Damascus between the Syrian government, represented by the Syrian Oil Minister Suleiman al-Abbas and the General Petroleum Corporation, and the Russian Soyuzneftegaz company.

The Russian company, founded in 2000, has already carried out nonprofitable exploration projects in northern Syria. The new deal is an expression of Moscow’s confidence that Syrian-Russian relations will continue with any future Syrian government, regardless of how the political crisis develops.

The Russian ambassador to Damascus, Azmatullah Kulmohamedov, who represented Soyuzneftegaz in signing the deal, said that reaching a political solution to the Syrian crisis will increase opportunities for cooperation between the two countries.

The director general of the General Organization of Petroleum, Ali Abbas, said the deal is “the first to explore for oil and gas in Syrian territorial waters,” pointing out that the “funding will come from Russia, but if oil or gas is discovered in commercial quantities, Moscow will recoup its production expenses.” He said the Russian company “will start implementing the deal immediately, bypassing the unfair economic sanctions against the oil sector.”

The Syrian oil minister said the contract covers a 2,190 square-kilometer surface area and includes several stages, adding that the value of “prospection and exploration is $100 million.”

In the recent discoveries off the Mediterranean, the gas reserves are estimated at 38 trillion cubic meters. According to Oil and Gas magazine, Syria has one of the largest offshore oil reserves, estimated at 2.5 billion barrels, one of the highest among its neighbors, with the exception of Iraq.

According to the magazine, the proven gas reserves in Syrian territorial waters at the end of 2012 stood at about 8.5 trillion cubic feet. But the Syrian government has kept the official estimate about its offshore energy wealth a secret. Some Syrian officials even denied that Syria has offshore wealth and limited the possibilities to the Lebanese-Syrian maritime border area, and gave them low estimates, too.

According to the oil minister, the deal was signed after “long months of negotiations,” and that signing it “in the current circumstances was a major challenge.” He believed that the agreement was “a sign of continued cooperation between the two peoples and governments of Syria and Russia,” adding that the initial discoveries are “encouraging.”

The coastal areas are considered the country’s safest, which makes the oil company’s work easier. But “terrorist acts” cannot be completely prevented. Going forward with the exploration indicates that the diplomatic policies of the two allies have produced enough achievements to ensure years of cooperation, especially after external military aggression on Syria became highly unlikely.

Abbas visited Moscow in early November and met with Soyuzneftegaz representatives. He encouraged “cooperation in the oil and gas sector, and the possibility of establishing joint investments.” That happened two months after the launch an international tender for prospecting and exploration, in which the fortunes of the Russian company were the largest.

Soyuzneftegaz is headed by Russia’s former Energy Minister Yuri Shafranik. The company operates in Russia, the Middle East, Central Asia, South America, North and West Africa, Australia and elsewhere. According to the Russian Itar-Tass news agency, the primary drilling on the continental shelf in Syrian territorial waters will take place over an area of ​​2,190 square kilometers.

Syrian observers previously talked about the presence of four oil fields stretching from the Lebanese border till the port of Banias and whose output could be 6 million to 7 million barrels a day.

Continue reading this article by registering at no cost and get unlimited access to:
  • Al-Monitor Archives
  • The Week in Review
  • Exclusive Events
  • Invitation-only Briefings

More from  Ziad Haidar