SYRIA - Part 2 - The Oilfields In A Managed Decline.

Oil production in Syria peaked in 1994 at 615,000 b/d and has since fallen to reach about 542,000 b/d in recent months, compared to 562,000 b/d in the first quarter of 1998. For a brief period in 1994, production hit a record of 618,000 b/d, compared to 158,000 b/d in 1980 when the state-owned Syrian Petroleum Co. (SPC) was the sole producer in the country. Syria was a net importer of oil until the mid-1980s.

Shell, the main operator in this country, had warned in early 1998 that if no significant finds were made in a few years, Syria could return to being a net oil importer by 2005. All the major producing oilfields in Syria have reached their plateau and most of them have begun a steady but managed decline since late 1995, after a very costly blow-out at a field.

A number of foreign oil companies have left Syria in recent years, due to very tough terms by SPC. Little exploration was done until mid-1996, when Nader Nabulsi was dismissed as oil minister and was replaced by Mohammed Maher Jamal. Since then exploration has picked up somewhat but drilling is limited to a small number of companies (see Gas Market Trends No. 9).

Unlike companies elsewhere, the operators in Syria are not allowed to lift or market crude oils they produce. All the output is sold to SPC at prices set by the latter, and the crudes are marketed by Sytrol which is under the control of the prime minister's office (see Part 3).

The Shell-operated system - consisting of Al Furat Petroleum Co. (AFPC), Al Badiya Oil Co. (BOC) and Al Bishri Petroleum Co. (BPC) - is by far the biggest oil producer in Syria. In Jan. 1996 it began a five-year cutback  schedule with its output set to fall by 10,000 b/d per annum. But the actual rate of decline increased in 1996 and in 1997. No major oil discoveries have been made in the past eight years and even fields on stream since 1993 have reached their plateau (see profiles in Gas Market Trends).

The decline in oil output has been partly offset by a rise in production of natural gas which is used for domestic energy. The shift to gas has limited growth in domestic oil consumption. The country's gas processing plants are being expanded (see Downstream Trends).

                SYRIAN CRUDE OIL PRODUCTION
                       (barrels/day)

                                    1994      1995    Mar '98    Mar 2000
AFPC/BOC/BPC (Shell & partners)  405,000   400,000    350,000     340,000
Syrian Petroleum Co. (SPC)       150,000   150,000    140,000     140,000
DEZPC (Elf)                         60,000    60,000     60,000
60,000
Al Khabour Oil Co.*                   --        --     12,000       2,000
Total                              615,000   610,000    562,000
542,000

*   Al Khabour's Kishma oilfield went on stream in mid-1997.