Syria - The Energy Base.

Syria is shifting to natural gas for domestic energy. Its proven oil reserves are not increasing at the pace necessary to keep up with the twin needs of local demand and generating vital hard currency income through exports. With a population of over 18 million growing at a rate of 3.4% per annum, Damascus wants to maximise oil export income while concentrating on gas for the country's energy needs.

Syrian oil production has fallen to 510,000 b/d, compared with a peak of 615,000 b/d in 1994, and appears set to decline further in the coming years. There is little exploration in the country and the oil reserves may not last long (see OMT & Gas Market Trends).

With per capita income independently estimated at less than $1,000 a year, the country's economy is in bad shape. The options in developing its energy base are limited by political factors. Still called a "terrorist state" by the US, future investments into its economy depend on a revival of the peace process between Syria and Israel. The US under a Republican administration, led by George W. Bush, is not trying as hard the previous Democratic government of Bill Clinton to revive Syrian-Israeli peace negotiations. Israeli-Syrian relations are tense because of renewed Hizbollah attacks through South Lebanon and anticipated Israeli retaliations. But in Israel Ariel Sharon's Likud strategists prefer to wait until the young Syrian President Bashar Al Assad, who took power when his father Hafez died in the summer of 2000, accepts less than the whole of Golan, leaves Lebanon or is overthrown by a more flexible regime.

With Israel and Turkey having a strategic alliance under the US umbrella (see its implications in News Service of this week's Diplomat), political factors affect Syria's potential for hydro-power generation as well. Moves by Turkey to control the Euphrates and Tigris rivers through its South-East Anatolian Project, involving a vast network of dams across the two rivers, restrict Syrian projects in the energy sector.