Thursday, November 6, 2014

Syria's Oil Sector in the Fall of 2014

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November 6, 2014
Beirut, LEBANON

ABSTRACT — The Syrian energy industry is currently in complete turmoil as a consequence of the Syrian Civil War, which started in March 2011. After more than three years and a half of civil war, Syria is divided between warring parties. This paper develops an analysis of Syria's energy industry with reference to the "oil" sector — the natural gas sector is not considered. Despite scarce and reliable data because of the ongoing war, the first chapter "The Current Condition of the Oil Sector in Syria" tries to understand the present state of the oil business in the country. The second chapter "The Syrian Oil Sector: An Overview" presents a general description of the oil sector as this was before the war. Finally, the third chapter "Will Syria Be an Oil Transportation Hub in the Future?" considers whether Syria could one day become a Middle Eastern transit hub for oil. This last point is quite relevant because in the last decades many opportunities related to this goal have been missed.       

CHAPTER I — The Current Condition of the Oil Sector in Syria
In fall 2014 discussions about Syria's oil sector are all focused on the Islamic State (a.k.a. ISIS or ISIL) occupation of large swaths of eastern Syria and precisely of some oil-producing governorates. At the time of this writing, clashes between the Islamic State fighters and Kurdish groups are taking place in the Syrian town of Kobani, which is located along the border with Turkey. Kobani, in Aleppo Governorate, is a strategic point for both contenders: For the Islamic State it is an oil transit route for smuggling oil to Turkey, while for the Kurds it is the place where to lay a potential pipeline transporting crude oil from Iraqi Kurdistan.  
  

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Syrian Civil War — Current Military Situation
Source: Wikipedia (Nov. 2014)

Already in late 2013, the Syrian government had lost control of the country's most relevant oil fields. In fact, last August, the Islamic State was in control of six fields in eastern Syria. Some sources affirm that in the Deir ez-Zour area, the Islamic State manages wells capable of producing 130,000 barrels per day (bbl/d) of mostly crude oil. In addition to the Kobani battle, currently, there is also an intense fighting in northeastern Syria, in the Hasakah Governorate, between the Islamic State and the People's Protection Unitis (Y.P.G.), which is the militant arm of the Kurdish Democratic Union Party (P.Y.D). Syrian Kurds after the beginning of the civil war exerted their control over this governorate and the P.Y.D. declared self-governance in late 2013. Exercising its power over also this northeastern corner of Syria — where there is the Rumailan crude oil field — would mean for the Islamic State to control nearly all of the country's oil fields as well as the access road to northern Iraq. Presently, government troops by themselves would be absolutely incapable of retrieving the lost ground in northeastern Syria. 

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Governorates of Syria — Source: Wikipedia

Oil wells permit the terrorist organization an easy access to economic resources, which are of paramount importance to continue to wage war in Syria and Iraq. Probably, thanks to oil last June, in Iraq and Syria, the Islamic State was able to raise as much as $2 million a day. After in September, the United States and some allies have started conducting airstrikes against the terrorist group in Syria, the Islamic State should now control between Iraq and Syria approximately 20,000 bbl/d of oil from the 70,000 bbl/d that it managed in August. It is not clear how much the Islamic State is obtaining from its oil trade. But if it were able to sell 20,000 bbl/d at $20 a barrel on the black market, it would earn half million dollars a day. The price for a refined barrel is in the range of $50 to $60. Most of the Islamic State production is in Iraq and not in Syria. 
The Islamic State does not have the skills required to manage the fields under its occupation — in the oil business it's "upstream" where the Islamic State has its most complex challenges. It probably produces only half the fields' regular output and, given its lack of expertise and know-how it risks seriously damaging in a permanent manner the mature Syrian oil fields, which need qualified personnel because they are in the final part of the production curve. But, if on the one hand, for the Islamic State tapping the resources is not an easy task, on the other hand, the organization has been quite successful in tapping the smuggling network in order to sell its oil. Oil exchanges are done in cash through middlemen with no real bank traceability. Airstrikes are also targeting many Chinese- and Turkish-makeshift refineries (each is able to process around 200 bbl/d of crude oil), which are the tools permitting the jihadis to wage their war. Reports say that the group is selling crude oil and petroleum products (gasoline, diesel fuel and propane) to black market dealers in Syria, Iraq, Turkey and Jordan. Some of the dealers are then reselling petroleum products and crude oil also to the Syrian government.  
Oil resources are showing that the terrorist organizations in Syria are not able to run like "real states" wide expanses of territory where several million people live. The economic model of these terrorist organizations, based on looting crude oil and economic resources, is not sustainable in the long run. If terrorist organizations act like countries they have to provide basic government services, which cost money and require a careful management. Absent a viable economic model, these organizations may become only a sort of failed state (like Somalia).
One final economic consideration about the Islamic State: In no viable and realistic way can the trade of crude oil as wells as refined products on a large scale be based on truck exports. In fact, Syria before the war used three main pipelines in order to move oil from eastern Syria to western Syria where there are the largest cities, the refineries and the export terminals. Moving crude oil and refined products via trucks means that the business is not sound and has a scarce sustainability in the long run. 
Because of the conflict, Syria is in short supply of heating oil and fuel oil for its citizens. At the start of 2013 Iran opened a $3 billion credit with the Central Bank of Syria to cover oil supplies (crude oil and refined products) — this was a part of an overall $7 billion credit. According to Reuters, between February and October 2013, 17 million barrels of crude were shipped to the Baniyas Refinery through tankers from Iran and Iraq via the Sumed Pipeline (Egypt). In 2012, both Iraq and Iran had already agreed to ship fuel oil and liquefied petroleum gas (L.P.G.) to Syria.
In specific, since the beginning of the coalition’s airstrikes on Sept. 23, oil prices have skyrocketed in Syria. The airstrikes against the energy installations are having an impact on the Islamic State but at the same time they have an impact on the Syrian population, which in the last weeks has seen important increases in the price of many primary goods (energy and food). And at the beginning of October, the Syrian government decided to increase the price of oil products (33 percent increase for gas oil and 17 percent increase for gasoline) and to permit the private sector to import various oil derivatives, which the private sector may then resell only to industrial concerns — in practice after many decades state monopoly was over. These two decisions make economic sense because currently neither the Islamic State nor Iran are really able to provide the quantities of energy (both oil and gas) necessary to run a country like Syria — it seems that the government is buying vessels also from other countries. And at the same time, the government is not anymore able to subsidize oil products as it has been doing until recently. 

CHAPTER II — The Syrian Oil Sector: An Overview
1) Organization of the Sector — The oil and gas sector is under the control of the Ministry of Oil and Gas. National Law No. 7 of 1953 established that petroleum resources found in the subsoil and off the Syrian continental shelf belong to the Syrian state. Later, in 1964, Syria passed Decree 133/22, which limited licenses for exploration and investment to the Syrian government. Petroleum operations within the Syrian territory are authorized according to a form of production sharing agreement (P.S.A.), which is granted by the government to the contractor and the Syrian Petroleum Company (S.P.C.), the state-owned oil company established in 1974. The majority of the country's P.S.A.s are equally split between the S.P.C. and its partners. In general, Syrian P.S.A.s last up to 25 years and permit the government to retain a certain percentage of the oil produced as royalties.  

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2) Reserves, Production and Exports — Historically Syria has never been a major player on world oil markets. But at the same time, until the recent discoveries of natural gas in the eastern Mediterranean, Syria has been the only real energy producer in that part of the Middle East that encompasses Lebanon, Palestine, Jordan, Syria and Israel as well.
According to the Oil & Gas Journal, Syria's proved reserves should be 2.5 billion of barrels as of 2010 — among neighboring countries only Iraq (and the Kurdistan Regional Government, the K.R.G.) owns a larger amount of oil reserves.
Before the commencement of the hostilities between the government and the opposition forces, production amounted on average to 400,000 bbl/d. At the world level Syria was ranked 33rd for crude oil production, i.e., in 2011, 0.4 percent of the world's total production. Already this percentage slid to 0.25 percent the following year. This reduction was primarily due to two factors: the civil war and the sanctions imposed by the United States (U.S.) and the European Union (E.U). In February 2014, the Energy Information Administration (E.I.A.) estimated that the overall Syrian crude and condensates production was 25,000 bbl/d, i.e., one-tenth of the pre-war production. This number included also the production from the areas under the control of the factions opposing the government. 

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On a world scale, Syria's production was not very relevant, but still in 2009 the government derived approximately 20 percent to 30 percent of its revenues from oil. Before the civil war, Syria collected from oil around $4 billion per year. Maximum production (610,000 bbl/d) was recorded almost twenty years ago in 1995. Since then, because of lack of technological development, depleted reserves and petroleum product subsidies (according to the Middle East Economic Survey, Syria spent $3 billion in subsidies in 2010), Syria started to import petroleum products. And, already before the civil war, between 2001 and 2011, crude oil production shrank by 41.2 percent. When between 2006 and 2011, Syria tried to hold four licensing rounds (two onshore and two offshore) the results were quite disappointing. Only in December 2013, the Syrian government signed a contract for oil and gas exploration that might be of some importance. The counterpart was the Russian company SoyuzNefteGaz and the contract was related to survey and exploration for oil and gas in the continental shelf belonging to Syria from the southern shores of Tartus to the city of Baniyas. The whole area is approximately 845 square miles.   
By now, many international oil companies (I.O.C.s, among them France's Total, which produced on average 39,000 bbl/d in 2010 and Anglo-Dutch Shell, which produced within the joint venture Al Furat Petroleum Company (A.F.P.C.) 100,000 bbl/d as of May 2011) and national oil companies (N.O.C.s) have ceased their operations in the country. At present, Western companies are legally prohibited from working in the country.
Before the start of the hostilities, Syria used to export over 150,000 bbl/d of crude oil, whose 99 percent went to Europe (Turkey included). The main European buyers were Germany, Italy and France, which, after the introduction of the sanctions against the regime of President Assad, stopped buying Syrian crude. In the end, in 2012, the country became a net importer of oil. Its exports are now zero, at least through official channels. 

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3) Location of the Oil Fields — Syrian oil exploration began in 1933 during the French Mandate thanks to the Iraqi Petroleum Company (I.P.C.), but it was not until the 1950s that oil was discovered in the eastern part of Syria around Souedieh in the Hasakah Province. The oil sector took off only in 1968 when the production of the Karatchok oil field was connected through a 663-kilometer pipeline to the port city of Tartus on the Mediterranean Sea. A second area of production was then discovered in the 1980s in the Euphrates Valley, from the city of Deir ez-Zour to the border with Iraq. Syria did not begin exporting oil until the mid-1980s. All of the country's exports are marketed by Sytrol, which is the state oil marketing firm (it normally sells oil under 12-month contracts).
The most important oil fields* are:
  • Omar Field (Deir ez-Zour Governorate) — 75,000 bbl/d.  
  • Thayyem Field (Deir ez-Zour Governorate).
  • Karatchuk Field (Hasakah Governorate).
  • Jbessa Field (Hasakah Governorate).
  • Rumailan Field (Hasakah Governorate) —400,000 bbl/d.
  • Souedieh Field (Hasakah Governorate) — 100,000 bbl/d.
* Some production data are missing so there are no clear data about the pre-war production of all of these crude oil fields.
4) Types of Syrian Oil — Syrian oil fields produce two different grades of crude oil:
  • Souedieh Grade (a.k.a. Syrian Heavy) with 22 API grade to 24 API grade and 3.9 percent of sulfur content.
  • Syrian Light with 38 API grade and 0.68 percent of sulfur content.        

Prior to the 1980s Syria had produced only heavy grade oil. Then light oil was discovered in the area of Deir ez-Zour in eastern Syria. These discoveries attracted international interest and some consortiums were formed — among them the Al Furat Petroleum Company (A.F.P.C.), which is a joint venture between the S.P.C., Royal Dutch Shell, the Chinese National Petroleum Company (C.N.P.C.) and India's Oil and Natural Gas Corporation (O.N.G.C.). Syrian Light, which is light and sweet, has similar characteristics to Libyan oil.
In 2011, heavy oil accounted for approximately 60 percent of the Syrian crude oil production. Syrian Light was mainly used by local refineries in order to manufacture products for the internal market. Indeed, Souedieh grade is not easy to process and according to a report by the Syrian National Council not many refineries in the world are able to refine it. In practice, the refining process is technically challenging and expensive. The majority of these skilled refineries are in the U.S. and in the E.U., although, as of 2011, China was upgrading some of its refineries in order to process heavy crudes as the one produced in Syria. Many times, a limited number of markets available to import and refine a specific type of crude oil mean that, in order to find alternative purchasers, that crude oil has to be offered at a discounted price. The E.U. boycott of Syrian oil is having an impact in reducing Syrian revenues because Europe with its refineries was one of the most important purchasers — in 2011 Europe imported 3.6 billion dollars' worth of oil from Syria.   
Syrian oil fields are mature and, as such, already before the civil war they underwent enhanced oil recovery (E.O.R.) techniques that use primarily natural gas. The industry did not have many expected new discoveries in the years to come. As of 2010, according to the government, Syria should have also 50 billion tons of shale oil reserves, but its development has now been postponed.
5) Pipelines — Syria does not have any "working" international oil pipeline passing through its territory. The third chapter will provide some information regarding the two international pipelines that in the past decades had transported oil across Syria. Neither is working today.
Instead, Syria has four main internal pipelines:
  • A 25,000-bbl/d pipeline from S.P.C.'s northeastern fields to the Tartus Terminal. The pipeline has also a connection to the refinery in Homs.
  • A refined-products 500,000-tons/year pipeline system linking the refinery in Homs to Damascus, Aleppo and Latakia. 
  • A 100,000-bbl/d spur line from the Thayyem Field and other fields to the T-2 pumping station, which is on the old Iraq Petroleum Company (I.P.C.) Pipeline, a.k.a. as the Kirkuk-Baniyas Pipeline — see Chapter III for more information about this old pipeline. The T-2 pumping station is now controlled by the Islamic State. 
  • A spur line from the Ashara and El-Ward fields to the T-2 pumping station.

6) Refineries — The country's two state-owned refineries, the one in Homs and the one in Baniyas, are operating at reduced capacity for lack of oil to refine. Combined, the two refineries are able to process 240,000 bbl/d (133,000 bbl/d in Baniyas and 107,000 bbl/d in Homs), but also when they were working at full capacity they met only 75 percent of Syria's pre-war demand of refined products. Because of damages to the infrastructure, it seems that currently the two plants are working at 50 percent of their nameplate capacity — in particular, the one in Homs is experiencing more difficulties because of its inland location. The result is a lack of some refined products for the Syrian population, which, as a consequence, is experiencing an increase in the prices of the few available petroleum products. Naturally, all of the plans related to the construction of additional refineries have been delayed or cancelled — among them there was the construction by C.N.P.C. of an oil refinery near Deir ez-Zour capable of handling 70,000 bbl/d to 100,000 bbl/d.    
7) Export Terminals — The two most important export terminals are:
  • Baniyas, which can accommodate Aframax tankers up to 120,000 deadweight tons and has a storage capacity of 437,000 tons in 19 tanks.
  • Tartus, which can accommodate up to very large crude carrier (V.L.C.C.) of 210,000 deadweight tons. A pipeline connects this terminal to Baniyas.

There is also a small terminal in Latakia.      

CHAPTER III — Will Syria Be an Oil Transportation Hub in the Future?
Introduction — One initial preliminary consideration: Syria no longer is a Middle Eastern transportation corridor. The country had lost this role in the 1920s and, only in the past five years before the civil war, it had started to emerge again as a railroad and road transportation hub with Turkey, Jordan and Iraq. The civil war has now completely canceled these small improvements. The map and the slide below show the importance of Syria as a crossroads for international trade.

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Syria at the Crossroads by Rich Clabaugh/Staff
Source: The Christian Science Monitor

 
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1) The Twentieth Century — For the majority of the twentieth century, Syria's aspiration to be become an energy hub toward the Mediterranean Sea and Europe were nullified by Middle Eastern politics. And in the past sixty years, despite many difficulties, Syria has been a partial transport hub only from the 1950s to 1982 (be it clear in a non continuous manner) thanks to the Kirkuk-Baniyas Pipeline, which used to transport oil from Iraq and the Trans-Arabian Pipeline (Tapline), which used to transport oil from Saudi Arabia. The slides below provide additional details about these two pipelines. 

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Kirkuk-Baniyas Pipeline — Source: Wikipedia

 
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Trans-Arabian Pipeline — Source: Saudi Aramco Expats

Until the increase of oil prices in the 1970s, Syria earned more from the transportation fees of these two international pipelines that crossed its territory, than from its limited internal oil production. Then in 1972, Syria and Iraq started to quarrel with reference to the tariffs applicable to the transportation of Iraqi oil via the Kirkuk-Baniyas Pipeline. In the end, Iraq decided to build the Strategic Pipeline linking Kirkuk to southern Iraq and the crude oil that before flowed north now was directed south. Similarly, in 1980 Iraq and Turkey bypassed Syria when they built the Kirkuk-Ceyhan Pipeline, Iraq's largest oil pipeline, in order to export crude oil from Iraq's northern oil fields.
During the Cold War years, diplomatic relations for Syria were quite complex because of the country's alignment with the Soviet Union, the attacks against Israel and its support of anti-Western terrorist groups. In specific, the political proximity to the Soviet Union was a real issue for Saudi Arabia and the other Persian Gulf countries. Things did not improve during the Lebanese Civil War. After the end of the Cold War, Syria was still entangled in Lebanon and continued not to be seen as a reliable partner by possible investors.     
2) The Projects of the New Century — In 2009, President Assad announced the "Four Seas Strategy", which consisted in transforming Syria in an oil hub for regional transportation between the Persian Gulf, the Black Sea, the Caspian Sea and the Mediterranean Sea. It was a grandiose and far-fetched strategy, but realistically it was impossible to achieve especially because it relied on Turkey's support. And, the relationships between Ankara and Damascus in the last years have deteriorated consistently. Currently, Turkey requires President Assad to step down from power.
At the end of July 2010, the Syrian government signed a memorandum of understanding (M.O.U.) with Iraq in relation to the construction of two oil pipelines for transporting oil from Iraq's Kirkuk Field. The signature of this memorandum, which included a section related to the construction of a gas pipeline from the Akkas Field in Iraq, was then followed in July 2011 by the announcement of another gas deal between the two countries. Syria and Iraq discussed these possible developments in the energy field thanks to the improved relationships between the two countries after 2005 when Shia-dominated governments started to hold on power in Iraq. Previously, the relationships between the countries had been very difficult. This was especially true after the Iranian Revolution in 1979, when Syria became one of Iran's most important allies and Saddam Hussein's Iraq was Iran's sworn enemy.  
3) Syria's Main Issues — One important caveat: Because of the current civil war it is almost impossible to think of specific pipelines passing across Syria.
And, before any energy projects involving Syria may be discussed the country has to solve three main issues:
  • First, to maintain its current borders and not to be split among competing groups. The second possibility would be a disaster because there would not be any possibility of transporting crude oil through a divided territory. This is exactly what is occurring in Iraq where the Kirkuk-Ceyhan Pipeline has not been transporting oil through the Iraqi section since March 2014. The reason is simple: The pipeline runs across territory occupied by the Islamic State, which damaged the infrastructure.
  • Second, all of the security issues must be solved. Again Iraq is a good example of a country that seemed pacified but that in reality had a lot of simmering tensions. Today, Iraq is in complete turmoil and the very existence of the country is not sure 100 percent. The result of this civil war in Iraq is that the country is able to extract oil only from the southern fields (the K.R.G. is apart) and then to export it via the Basra terminal. The reason is quite simple: political stability and more security in the area. Syria needs to learn the Iraqi lesson.
  • Third, the type of Syria that will emerge from the civil war will tell us a lot about the possible future agreements with neighboring countries. The current deep split between countries aligned with Iran on one side and countries aligned with Saudi Arabia on the other side won't abase soon. According to who will be the winner in Syria, there will probably be different investment agreements, which not necessarily will follow sound economic foundations. This was the rule in the past and will probably be in the future. In other words, it will be the relationships between Syria (it's not clear what Syria will become), Iraq (it's not clear what Iraq will become), Turkey and Iran that will decide the route of the pipelines in the area.      

So, under the current circumstances only general considerations may be thought of with regard to Syria's possible future role as a transportation hub for oil.
4) The Oil Transported Across Syria Will Arrive from Iraq — From an economic point of view it seems plausible that the oil that will transit through Syria will primarily arrive from northern Iraq (and/or from Kurdish areas in Syria and/or in Iraq according to the future political developments). Shipping crude oil from southern Iraq or the Persian Gulf via pipeline to Syria and/or Turkey may be based on political reasons or on the necessity of diversifying exports routes — a couple of years ago many experts were talking of bypassing Hormuz in case of an Iranian blockade of the strait — but from an economic standpoint it could be expensive. Moreover, oil from southern Iraq is very close to the port city of Basra, which is home to all of the six Iraqi ports, including the country's unique deep-water port. And Basra terminals are currently able to export 2.4 million bbl/d, which right now is practically the whole Iraqi oil exported.
When in 2013, Ankara and Baghdad discussed the possibility of connecting Basra to Ceyhan via pipeline — current events in Iraq have completely ruled out this project — the idea was to build only a new pipeline between Basra and Kirkuk and then to pass oil to the Kirkuk-Ceyhan Pipeline, which despite, a capacity of 1.6 million bbl/d, transported only 400,000 bbl/d. In other words, the idea was to ship via the Kirkuk-Ceyhan Pipeline around 700,000 bbl/d — the Kirkuk-Ceyhan Pipeline consists of two twin pipelines, but at that time only one leg was operational, while since March 2014 the pipeline has been completely out of service from Kirkuk to the border with Turkey. This project wanted to reconstruct the Iraqi oil system of the end of the 1970s, which was based on the Kirkuk-Ceyhan Pipeline and the Strategic Pipeline. The latter, which is now not operational and severely damaged, was a north-south system, consisting of a reversible 1.4 million bbl/d pipeline. Through the Strategic Pipeline, Iraq could export Kirkuk crude from Basra and southern Rumaila crudes from Turkey.   
The idea of constructing a new pipeline between Basra and Kirkuk might have been correctly motivated. In fact, once a pipeline has been laid, like the Kirkuk-Ceyhan Pipeline, it has to be used. With pipelines, idle capacity means economic losses. But, the complete construction and the use of a new pipeline from southern Iraq or other Persian Gulf countries to Syria and/or Turkey are very expensive tasks, especially in light of the proximity of Persian Gulf countries to the sea. In general, crude oil is cheaper to transport by tanker than by pipeline. The two slides below provide additional details about transporting oil via pipelines and tankers.

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5) Syria's Four Complex Options — The final customer for the oil transiting through Syria or its neighboring countries is primarily Europe (E.U.-28), whose first supplier in 2012 was Russia with 33.7 percent of the E.U. crude imports. Saudi Arabia was the third supplier with 8.8 percent and Iraq the seventh with 4.1 percent (Eurostat data). Data show that Middle Eastern crude oil exports first and foremost go to Asia. According to the Energy Information Administration (E.I.A.), in the year 2011 an average of 14 tankers per day passed out of the Persian Gulf through the Strait of Hormuz. These tankers carried 17 million barrels, whose 85 percent was plying to Asian markets. Last year, China overtook the U.S. as the world's largest oil importer and Japan, India and South Korea are all in the first five positions in this ranking. In the Middle East, only Iraq has a higher percentage of exports toward Europe (20 percent) - geography tells us something. All these data mean that with a European economy dormant it won't be easy to find additional markets for crude oil shipped to Turkey or Syria via new pipelines.          

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In general, four are the possible options for Syria:
  • To be a transit country toward Turkey (final destination) — At the time of this writing, the utilization of this route is completely interlocked to a regime change in Syria. Given the current tense relationships between Syria and Turkey, Ankara would not accept a deal with Syria unless President Assad steps down and a Sunni-oriented Syria emerges.
  • To be a transit country toward Lebanon (final destination) bypassing Turkey — This is a strange route. First of all, if oil is shipped to Lebanon it has to pass across Syria. And if oil transits to Syria what is the reason not to export it through the Syrian ports, which have been exporting oil for the last thirty years?
  • To be the destination country bypassing both Turkey and Lebanon — Many factors play a role in the implementation of this route, which Turkey does not favor. But, if in both Syria and Iraq the incumbent governments could recover their legitimacy with reference to respectively the whole Syrian territory and the whole Iraqi territory this option could be implemented. If, instead in both Syria and Iraq gained power two Sunni-led coalitions it would still be possible to be implement this option, but in reality it would be more difficult in light of Turkey's opposition.
  • To be excluded by pipelines that will arrive in Turkey — If chaos continues in Syria this will be a very probable option. It already happened twice in the past when the Kirkuk-Baniyas Pipeline and the Trans-Arabian Pipeline were shut down. Investors (private and public as well) want stability. Lacking this, there won't be any investment. 

After the 2003 invasion of Iraq, the Pentagon studied the possibility of utilizing the oil route Mosul (Iraq)-Haifa (Israel). In fact, between 1935 and 1948 a pipeline run from Mosul to Haifa, which at that time belonged to the British Mandate of Palestine. After the creation of the state of Israel, Iraq shut down the pipeline. This project — let's call it the fifth option, Syria excluded by pipelines that will arrive to Israel — under the current circumstances is absolutely not doable.     
The "Four Seas Strategy" is not a viable option because at least two of its pillars, the Black Sea and the Caspian Sea, are not achievable by Syria. A simple look at the map well clarifies that the only real country that could play a four-sea strategy is Turkey. Geography matters and it's difficult to understand why crude from the Black Sea and the Caspian Sea should travel to Syria's ports and not to Turkey's in order to reach Europe.
Moreover, in this game of pipelines, Turkey, as well as Syria, wants to be a transportation hub for oil and gas. And Turkey may eventually accept Syria only as a transit country, but not as the final destination of pipelines that bypass Turkey. It's quite understandable why Ankara is against the possibility of reopening the Kirkuk-Baiynas Pipeline, which would challenge the Kirkuk-Ceyhan Pipeline, notwithstanding that the latter is currently not working from Kirkuk to the Turkish border, but only from the border between the K.R.G. and Turkey where it receives Kurdish oil via the Iraqi Kurdistan Pipeline.     
6) The Last Factor: Syrian Kurds — Another factor that will play an important role with reference to the future development of Syria's oil sector is the emergence of an area under Kurdish control in Syria's northeastern corner, which is the territory where most of Syria's oil reserves are located. As it was explained in the first chapter, it's thanks to the Syrian Kurds' resistance that Hasakah Governorate with its oil riches has not fallen yet under the Islamic State.

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Syrian Kurdistan — Source: Wikipedia

The events of the last three years have shown that Iraqi Kurds want to manage their oil and gas resources independently of Baghdad — some members of the K.R.G. political establishment plainly speak of independence for Iraqi Kurdistan. It's quite probable that something similar will happen also in the "Syrian Kurdistan". If Syrian Kurds are able to repel the Islamic State attack, at least they will request a slice of the oil pie, no matter what the Syria's political system will be. For instance, Syrian Kurds could offer Iraqi Kurdistan a direct route (Rojava Route), for its oil exports. In practice, the K.R.G. could have a second route in addition to the one to Ceyhan.
It is too early to understand whether there will be a new actor in the Syrian-Iraqi oil chessboard in addition to the K.R.G. For the time being, apart from fighting the Islamic State, Syrian Kurds are correctly maintaining a neutral position between President Assad and the Syrian National Council (S.N.C.). In specific, the P.Y.D., which is linked to Turkey's Kurdistan's Workers Party (P.K.K.) considers the S.N.C as a pure marionette from Ankara. If the recent vicissitudes of the K.R.G are any guide, Syrian Kurds will progressively assert themselves as an element in the Syrian equation. In other words, this means that they will look for more autonomy. And, for them, oil will be an important tool as it has been with the K.R.G.




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