SYRIA - Sufian Allaw.

The Minister of Petroleum and Mineral Resources, Allaw took up this position on Feb. 11, 2006. He succeeded Dr. Ibrahim Haddad. Like Haddad, Allaw has little or no experience in this sector. Until he was given this portfolio, he used to be deputy minister of electricity.

(Before becoming petroleum minister in late 2001, Dr. Haddad used to head Syria's Atomic Energy Organisation. A Christian from a Greek Orthodox denomination, Haddad came from a prominent Syrian family with branches in Lebanon. Haddad had succeeded Muhammad Maher Bin Husni Jamal, who had been minister of petroleum and mineral resources since July 3, 1996. Jamal, an efficient upstream expert who previously was chairman of al-Furat Petroleum Co., now the second biggest oil producer in Syria, worked hard to stop foreign companies from abandoning the country. A number of foreign companies had left the country because of tough E&P terms and restrictive approach to the downstream sector by Jamal's predecessor. But as in the case of his successor Haddad, Jamal's hands were tied and had to follow orders originating from the invisible layer).

Though a newcomer to the petroleum sector, Allaw has been empowered to improve the E&P regime. But this will remain less attractive than E&P agreements on offer by Turkey, Egypt and other countries in the region.

Allaw has inherited a declining oil industry, with crude oil output in 2006 set to fall to 397,000 b/d from a peak of 615,000 b/d in 1994 and an average of about 414,000 b/d in 2005. Syria would become a net importer of oil, as it was until the mid-1980s, if no major discoveries are made during this decade.

The latest E&P bidding round has attracted 23 tenders from 13 international oil companies (IOCs) for the nine blocks offered in 2005. PSAs are to be signed in June. But Petroleum Argus on Feb. 6, 2006, said the terms of the PSAs on offer were tougher than in previous ones.

A maximum 40% of recovery costs is offered, compared with existing cost recovery rates of 50%, while the 25-year PSAs offer just 12.5% in royalties from total production. Yet the exploration interest expressed in the current round came as a boost to Damascus which is desperately seeking to stem its falling oil production.

One of Allaw's first major tasks, according to Argus, is to sign off on the long disputed development plan with Marathon of the US for two gas fields at Sharifah, near Homs. This lies in the gas-prone Palmyra basin in which several gas fields have been discovered and developed. Argus said an accord with the Damascus government "will allow Marathon to sell its position, and Petro-Canada...has expressed strong interest in taking over the gas project".

Petro-Canada, which in early 2006 sold its stake of about 37% in al-Furat Petroleum Co. to a partnership of the state-owned ONGC of India and CNPC of China (see gmt12FieldsMar20-06), has also bid for new E&P blocks and is said to be insisting on staying in Syria. Petro-Canada in 2005 lost a PSA to develop gas fields and related facilities in partnership with Occidental Petroleum of the US and Petrofac of the UK.

Deputy Oil Minister Hassan Zainab, who in 2003 who over from Jaber Ghzayel is helping new minister Allaw in getting to the depth of the petroleum industry. Ghzayel now heads Sytrol, the oil marketing concern attached to the prime minister's office (see OMT).

As a minister Allaw has control over the heads of all the state-owned companies active in the petroleum sector, including the Syrian Petroleum Co. (SPC) and Syrian Gas Co. (SGC), and their upstream and downstream units. But the ministry has no control over external marketing of oil, which is handled by Sytrol.

Under the minister's guidance, the SPC and SGC heads nominate the chairmen of the oil and gas producing JVs who are usually elected automatically by the latter's boards of directors. These chairmen are chosen from among the most senior SPC and SGC executives.