Syrian oil draws Asian help
US renews sanctions but China, India, and Russia are eager to invest in Syrian oil.
With Asian economic powerhouses such as China and India aggressively hunting for new sources of energy to fuel their expanding economies, opportunities beckon for sanctions-hit Syria.Skip to next paragraph
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Syria's petroleum wealth, although limited by Mideast standards, is attracting the growing interest of oil-hungry Asian nations, even as some American oil majors pull out to minimize their investment risks.
"The majority of Western companies are not interested in investing in Syria because any country that is under sanctions or could face sanctions is going to be regarded as a higher risk," says Samir Saifan, a Syrian economist. "Naturally, Syria will look for other sources, and they are China, India, Malaysia, and other Asian countries."
Not only Syria is looking. Even the largest Mideast oil and gas producers, such as Saudi Arabia and Kuwait, are eyeing the booming markets of the East, a shift that threatens to weaken Western influence in the region.
"We are in a very fluid transitional period, not just in terms of energy factors but geopolitical factors," says John Calabrese, an energy specialist with Washington's Middle East Institute. "Every country is recalibrating its relations in order to try and, at least in the short term, achieve a better balance."
Oil production is a vital component of the Syrian economy, generating almost 70 percent of its export revenues. But output has been in decline for a decade, dropping from around 600,000 barrels per day to 460,000 barrels per day. At the current rate, Syria could be a net oil importer within a decade, a reality that has galvanized the Syrian government to intensify oil exploration and production.
Two years ago, the Bush administration slapped limited sanctions on Damascus, banning the export of all US goods to Syria except for humanitarian supplies. Earlier this month, the sanctions were renewed by President Bush for another year. The sanctions and political pressure have encouraged some American oil companies to pull out or reduce their presence: US oil giant ConocoPhilips withdrew from Syria in 2004 and Devon Energy of Oklahoma City, Okla., exited last year.
"Definitely there is a lot of pressure being put on anyone doing business there," says Said Ghusayni, vice president of Mitsui Bussan Commodities in London. "It's very difficult for any US majors to do any business in Syria."
Marathon Oil Company of Houston was locked into a long-running dispute with the Syrian government after discovering two oil-and-gas fields in central Syria in the 1980s. Last week, Marathon signed a $127 million deal with the state-owned Syrian Petroleum Company, ending a freeze in the company's activities in Syria. Rather than a trend-bucking move by an American oil major to invest in Syria, however, the agreement allows the firm to sell its interests to a third party, giving it a door to exit Syria if it so wishes. "That's definitely one option," says Scott Scheffler, a spokesman for Marathon Oil.