The Syrian government has ratified the only contract for oil exploration along the Syrian coast. The contract was won by the Russian SoyuzNefteGaz oil company, and has an estimated cost of $100 million. This ratification comes six months after the signing of the original contract with the company.
Hassan Zainab, an assistant to Syria's minister of oil, told As-Safir that the Syrian government has ratified the contract, which means the company can start its work soon. He noted that the aforementioned cost is linked to the exploration process, which will be carried out as a first phase.
Thus, SoyuzNefteGaz has become the first foreign company to obtain the right to explore and produce oil and gas in the continental shelf belonging to Syria.
The contract stipulates that the company will conduct surveying and exploration for oil and gas in the region extending from the southern shores of Tartous to the city of Banias. This area is estimated at 70 kilometers [44 miles] in length with an average width of 30 kilometers [18 miles], and comprises a total area of 2,190 square kilometers [845 square miles].
Zainab said that the current cost is based on "minimum estimates," considering that the cost of a single day of drilling is $80,000, and the first phase is expected to last 20 days. This will be followed by studies to help determine whether or not to build an oil terminal. He also noted that the continental shelf targeted by this operation is not the only shelf, as government studies indicate the presence of three other promising regions along the Syrian coast. He expected the potential for gas production, not oil, to determine the investment feasibility of these areas.
The implementation period includes various phases, beginning with the exploration phase, which includes the Russian company carrying out vibrational surveys according to the latest technical methods and issuing final technical studies to identify possible drilling opportunities. The Russian company will cover all the expenses of the exploration operations, which are estimated at $100 million.
The Syrian Oil Ministry said the Russian company would spend $15 million during this phase to identify possible opportunities for drilling, in preparation for the drilling of at least one exploration well. This will be followed by increased spending, of more than $75 million, in the following phase. And the company will later carry out development and production work, in the event that the exploration and drilling are successful and they obtain commercial quantities of oil and gas.
SoyuzNefteGaz has operated in Syria since 2004, and failed to find oil of investment-value in three wells drilled near the Syrian-Iraqi border. The company is headed by Yuri Shafranik, who was Russia's energy minister from 1993 to 1996. It is one of the major Russian oil companies, though it is registered as a "legal personality, organized under the laws of the Republic of Panama, as a contractor for the General Organization for Oil, for oil exploration, development and production in maritime sector number (III) in the territorial waters and the exclusive economic zone of the Syrian Arab Republic," as stated in the decision to ratify the contract.
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