SYRIA - Local Consumption.

Despite the shift to natural gas since the 1980s, Syria's oil consumption still averages about 200,000 b/d. Syria's total energy consumption averages more than 350,000 b/d of oil equivalent, with natural gas accounting for almost one third. Hydro-power accounts for less than 7% of total consumption, because of a fall in water levels at the Euphrates River.

Government efforts to limit oil consumption have met with limited success. Reasons for this range from a rapid growth of the population to state subsidies that keep domestic oil prices down at levels which the Syrians can afford.

Much of the local demand for refined oil products is met by the refineries at Homs and Banias. Syria is self-sufficient in gasoline. A big part of its consumption consists of fuel oil, of which a surplus is being exported. But Syria has to import more than 1.3 million tons/year of gasoil and diesel to meet local requirements, compared to 550,000 tons in 1997. Imports are expected to exceed 1.75m t/y by 2006 and 2.65m t/y by 2010. There are plans for a new complex oil refinery to be built in Deir Ez-Zor, which would end Syrian imports of oil products in the medium term (see next week's DT No. 10).

The Syrian Company for the Storage and Distribution of Petroleum Products (Mahruqat), fully-owned by the state, is in charge of oil marketing. The Syrian Company for Oil Transport (SCOT), another state concern, operates the country's pipeline network. SCOT carries crude oils from the fields in the north-east to the refineries and the Tartus and Banias oil terminals, and petroleum products from the refineries to consumption centres.

In July 1993, the government authorised two private companies - Musa Fattush & Partners and Bahij Yasaminah & Partners - to undertake the transport of refined products and crude oil within the country and abroad. They are allowed to charter or buy road and sea tankers for the purpose, and may make use of local infrastructure including roads and railways.

Gas consumption now is averaging about 26 MCM/day, up from 22 MCM/d in early 2002, and officials expect this to reach more than 35 MCM/day by end-2005 or early 2006. The power sector is by far the main user of natural gas, taking about 13 MCM/d, i.e., half of total marketed gas production and consumption.

The first gas turbine in Syria was installed in 1972, at the Suwaidiyah power plant, in order to utilise associated gas for electricity. But the shift to gas for energy was very limited and slow until the mid-1980s. The number of gas turbines installed in the country has increased rapidly since 1985. The share of gas-generated electricity in Syria rose from 0.1% in 1982 to 3.3% in 1984, 3.8% in 1985, 6.4% in 1986, 7.5% in 1987, and 5.8% in 1988. During those years power requirements had increased considerably over those in 1972, so this share involved a large capacity.

By end-2005 or early 2006, the share of natural gas in Syria's total energy consumption is expected to exceed 35%. Natural gas is also used in the production of fertilisers, and in the cement, ceramics and metals industries.

The share of natural gas in electricity generation rose from 0.1% during 1982 to 3.3% in 1984, 3.8% in 1985, 6.4% in 1986 and 7.8% in 1987. It reached almost 18% in 1995 and over 20% in 1997, while the country's energy consumption base has increased considerably during the past seven years. A number of gas-fired power stations are to be built in Syria, with 3,600 MW to be in installed from 2004 to 2010.

The shift away from oil will entail the laying of 1,160 km of new gas pipelines. This will supply new power plants, as well as a growing fertiliser sector, an iron and steel complex and other industries as well as household users.

The Power Sector: There has been rapid growth in power generation capacity in Syria in recent years. Installed capacity at present is about 7,000 MW, compared to a little over 4,000 MW in early 1998. This includes 900 MW in hydro-power plants which are only operating at about 200 MW. Peak demand in 2004 was expected to exceed 7,000 MW. This compares to a peak demand of 2,500 MW in 1991. Annual demand for electricity has been growing at the average rate of 7%.

It was said in early 2000 that installed capacity by end-2001 or early 2002 should reach 7,344 MW and should include 1,605 MW of hydro-power. But most new projects have been delayed since 1999. Four projects originally supposed to be completed by now but yet to be contracted are:

Expansion and conversion of the 200 MW Tishreen power plant to a 300 MW combined cycle (CC) facility, in a $220-250m project which was in 2002 expected to be completed in early 2004. But it is not likely to be on stream before 2006 at the earliest. Retendered, with seven bid received on Oct. 20, 2003, this project is to be financed by the Kuwait-based Arab Fund for Social and Economic Development (AFESD) and the Jeddah-based Islamic Development Bank (IDB). The bidders for this project have included a partnership of FiatAvio of Italy and Siemens of Germany, Alstom Power of France, Belleli of Italy, Deutsche Babcock of Germany, Iran Power Plant Projects Management Co. (Mapna), Saudi Binladin Group, and Transelektro of Hungary. The plant, built in the late 1980s by Soviet contractors, has two 100 MW gas turbines. The successful contractor will install a new 200 MW steam turbine and two water heat recovery boilers. The plant is run by state's Public Establishment of Electricity Generation & Transmission (PEEGT).

Expansion and conversion of the 375 MW Nasiriyeh power plant to a 500-550 MW CC station. The plant has three 125 MW gas turbines supplied in 1997 by Fiat Avio. This, too, is owned by PEEGT. It was retendered in 2003, and a partnership of Siemens and Koch has since received a letter of award. This, too, will be financed by AFESD and IDB. This project involves the supply of an additional gas turbine and two heat exchanger/steam turbine units.

Construction of a 750 MW CC plant at Deir Ali in a $350m project. A tender for a design and build contract was issued in October 2003 and the bidders had until Feb. 25, 2004, to submit their final offers to PEEGT.

Construction of a 750 MW CC plant in Deir Ez-Zor in a $350m project. The design and build contract was tendered last month, with Japan expected to provide project finance.

In early 2000 it was said the first private power venture in Syria called Syrian Power Investment Co. (SPIC) was to have a 600 MW plant by 2003. But so far no progress has been reported of this IPP project. Incorporated under Belgian law in 1994, SPIC was a joint venture between the Syrian-owned Sarakbi Group (headed by US-based Bourhan Sarakbi), and Tractebel of Belgium. The IPP was to be located at Bardeh, 150 km north of Damascus, and the plant was to be a build-operate-own-transfer (BOOT) venture. The government confirmed its support for the project in December 1997, but negotiations about the tariff have been dragging on between the PEEGT and SPIC. Delays were caused by a hardening of PEEGT's position in early 1999 following extremely low tariffs which Egypt secured from its three IPPs. A Sarakbi executive in mid-1999 was quoted as saying: "The eventual price will be higher than in Egypt because of the extra costs in Syria, particularly on the financing".

The rapid rise in generating capacity in recent years followed high demand growth which sparked off a period of power cuts in the early 1990s. This led President Assad to declare in September 1993 that every citizen had the right to a secure power supply. Until 1994, power cuts used to last several hours a day. The situation was so bad that supplies in war-ravaged Lebanon and Iraq were better than in Syria. After the government made the upgrading of this sector a priority, Electricite de France - under a 2-month EU-financed contract in 1994 - did a study to improve PEEGT's operations.

Financing for new power plants was done mainly by Japan's Overseas Economic Co-operation Fund (OECF), the Kuwait Fund for Arab Economic Development (KFAED), the Saudi Development Fund (SDF), AFESD, and IDB. OECF in 1998 was merged by the Export-Import Bank of Japan and this entity now is known as Japan Bank for International Co-operation (JBIC).

Capacity expansions on an emergency basis were carried out in the mid-1990s. Eight 125 MW gas turbines were added in various parts of the country during that period. Of these turbines, three units operating since mid-1998 generate 384 MW at Zaizoun, near Idlib in the north-west, fuelled by gas from Palmyra fields delivered through a 120 km pipeline. The plant was financed by AFESD.

Mitsubishi Heavy Industries (MHI), as part of a Japanese consortium including Mitsubishi Electric  and Fuji Electric, has had a big role in the Syrian power sector. In December 1995 a 600 MW CC plant built by MHI began operating at Jandar, south of Homs. Financed by a $410m Japanese OECF loan. The plant has four 100 MW gas turbines and two 100 MW steam turbines. MHI built a 1,000 MW steam plant at Aleppo, with a $530m loan from SDF, and the first three 200 MW units started up in early 2000 - the other two units were completed in 2001. MHI has also built for Syrian Petroleum Co. (SPC) the 600 MW Al Zara gas-based power station near Homs, with a $440m OECF loan. Its first 200 MW unit began operating in late 1999. The final 200 MW unit start up in early 2001. The plant has a pressure reduction and metering system for the gas intake facility. MHI had implemented the expansion of the Banias power plant in 1986, under a $296m Japanese loan; and this now has a 680 MW capacity with a dual use system for fuel oil and gas. Enel of Italy has been involved in the upgrading of Banias.

In April 2001, Japanese and Syrian officials celebrated the rehabilitation of the Banias plant, which was financed by a Japanese grant of about $9m. The refit increased the plant's efficiency and reduced annual operational costs by up to $5m. It was part of a Japanese-Syrian agreement signed in 1999. With Tokyo having given Damascus almost $1 bn worth of project finance in Syria's power sector since 1989, MHI has done most of the work. Syria wants more aid from Japan for rehabilitation of other power plants.

KFAED in August 2001 allocated a $320m loan to be spent on Syria's gas, water and power projects over a four-year period. The projects include a power grid to connect Damascus, Hama and Aleppo, and a $60m conversion of one of the Banias power plant's fuel-oil fired unit to use natural gas.

Rehabilitation and conversion projects include work at the 630 MW Mhardeh power plant, on the Mediterranean north-west of Hama. Lahmeyer International of Germany has been the consultant. Apart from these, the PEEGT has the following gas-fired plants: a 450 MW station at Suwaidiyah, a 120 MW plant in Der Ez-Zor, a 90 MW plant in Al Thayyem, and a 60 MW plant at Qattinah. The PEEGT has nine 100 MW hydro-power plants at the Euphrates Dam which, together, have been operating at 200 MW due to low water levels in Lake Assad and technical problems.

The governments of Jordan and Syria recently inaugurated work at the long-awaited Wihdeh dam project. The 600-metre long dam is to supply irrigation water for 47,000 donums of land in the Jordan Valley and to provide drinking water for Amman and the neighbouring town of Zarqa, as well as supply Syria with up to 18,000 MWh of electricity per annum. KFAED, AFESD, IDB and the Abu Dhabi Fund for Economic Development (ADFAED) will partly finance the project.

Another important development in this sector is the planned link-up of the Syrian power grid to those of Turkey, Iraq, Jordan Egypt, Libya, Tunisia, Algeria and Morocco, under an agreement signed in Damascus in August 1996, being financed by AFESD. The link to Jordan has entailed a 400 kV transmission line from Jandar to the Amman North substation done in early 2000 by KEC Int'l of India under a $45m contract signed in November 1997. Jordan is already linked to Egypt's network, which means Syria's and Egypt's grids are connected. The link from Damascus to the Turkish border is being built by a consortium of Galkon of Turkey and SAG of Germany.

In late 2001, Swedpower Int'l of Sweden began work on a six-month study to look at the feasibility of establishing a control centre for the link up among the 10 countries. The study, being financed by AFESD, will assess whether one centre can serve all the 10 countries or if a control centre will have to built in each one. The control system is a prerequisite for trading to begin on the network that will link the ten countries.