Policy Brief 163 April 2021
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ORSAM POLICY BRIEF 163 APRIL 2021 THE SYRIAN REGIME’S OIL AND GAS CRISIS Suhaıl al-Ghazı INTRODUCTION governorate, which include 6 oil fields, in- cluding Al-Suwaidi, the highest in terms of yria is not a country that possesses production of oil, in addition to Rmelan, Al- huge oil and gas reserves. Oil reserves1 S Jebsa, Al-Hol, Al-Shaddadi, and al-Yousfie. amount to about 52 billion barrels, 2 which are distributed in northeastern Syria, Before 2011, Syria’s oil production amounted specifically in the Deir Ezzor Governorate, to about 400,000 barrels per day, of which which consists of the Al-Omar, Al-Tanak, Al- around 140,000 barrels per day were exported, Taym, Al-Ward, and the fields in Al Hasakah mostly to European countries. 1 “International Energy Data and Analysis: Syria”, U.S. Energy Information Administration, Oil & Gas Journal, June 24, 2015. 2 “Statistical Review of World Energy”, BP, 2019. The Syrian Regime’s Oil and Gas Crisis Instead, gas reserves3 range loss of control over the main between 9 and 8.5 trillion cubic oil fields located in northeastern meters, and most of the fields Syria. Indeed, regime forces are distributed in eastern Homs withdrew from most of the oil and northern Damascus. Before fields in the governorates of 2011, its production amounted Hasakah and Deir Ezzor bet- to around 280,000 cubic meters ween mid-2011 and early 2012. of gas, most of which was lo- While opposition forces and cally consumed in order to ge- the Al-Nusra Front took control nerate electricity and for do- of most of the oil fields, the re- mestic consumption. gime managed to keep only a minority of oil fields located After the start of the crisis in This exponential east of Deir Ezzor. The loss of 2011, oil production decreased4 decrease in oil control of these areas, and its to around 25,000 barrels per production led to a oil revenues and reserves, in day, and Syria turned from a severe crisis in favor of the opposition, was self-sufficient country to one regime-controlled later followed by the emergen- that relied on Iranian imports ce of ISIS, which, together with areas, which was and smuggling. This exponential accompanied by a increasing territorial control, ac- decrease in oil production led quired control over all oil fields rise in fuel prices, to a severe crisis in regime- located in the Deir Ezzor Go- with long queues of controlled areas, which was ac- vernorate. At the same time, cars formed in front companied by a rise in fuel pri- the YPG, the Syrian wing of the of gas stations ces, with long queues of cars Kurdistan Workers Party PKK, becoming a poster formed in front of gas stations took control of the fields of Ha- image of post-2011, becoming a poster image of sakah Governorate. and it contributed post-2011, and it contributed as as well to an well to an unprecedented rise After the start of military ope- unprecedented rise in food prices. rations by the US-led Global in food prices. Coalition against ISIS in 2014, REASONS OF THE ISIS’s gradual loss of territory CRISIS: CONFLICT, was accompanied by its loss SANCTIONS, AND BAD of oil reserves and revenues, MANAGEMENT which continued inexorably until the YPG’s umbrella organization The main cause behind this cri- Syrian Democratic Forces (SDF) sis can be found in the regime’s took control5 of the last field, 3 “International Energy Data and Analysis: Syria”, 2015. 4 “Syria Crude Oil: Production”, Organization of The Petroleum Exporting Countries (OPEC), 1960 – 2019. 5 “US-backed SDF Captures Syria’s Largest Oil Field From ‘Islamic State’”, DW News, October 23, 2017. 2 policy brief 163 Suhail al-Ghazi A photo taken from Mardin province of Turkey shows U.S. troops on November 01, 2019 resumed military patrols around oil reservoirs in northeastern Syria. the Al-Omar in the Deir Ezzor governorate, in controlled areas – an endeavor which cost October 2017. him his inclusion in the sanctions list enacted by the European Union7 and the US.8 In this period, despite being militarily involved against opposition forces, the Assad regime The regime later replaced Haswani with anot- totally relied on local intermediaries to purc- her businessman, Hussam al-Qaterji, who hase oil to be able to meet the daily needs established a private company to transport of the population still under its control. This oil by trucks from eastern Syria to the Banias led the Syrian regime to get into agreements and Homs refineries. The agreement9 con- with the various forces controlling the oil cluded by al-Qaterji with ISIS remained in fields, including ISIS. Indeed, at the beginning place even after the change of authority in of ISIS’s control over the oil fields, the Syrian NorthEast Syria and continued10 also after businessman George Haswani 6 was respon- SDF took control of the oil fields. The agree- sible for negotiating agreements with ISIS ment consists of the SDF selling oil to the re- commanders to transport oil into regime- gime, and the regime refining and re-selling 6 Solomon J. and Faucon B., “An Energy Mogul Becomes Entangled with Islamic State”, The Wall Street Journal, May 8, 2016. 7 Lester M., and O’Kane M., “Syrian Sanctions on George Haswani Annulled”, European Sanctions, March 22, 2017. 8 “Treasury Sanctions Networks Providing Support to the Government of Syria, Including for Facilitating Syrian Government Oil Purchases from ISIL”, U.S. Department of the Treasury, November 25, 2015. 9 Georgy M. and Dahan M., “How a Businessman Struck a Deal with Islamic State to Help Assad Feed Syrians”, Reuters, October 11, 2017. 10 “One of Assad’s Most Prominent Businessmen Founds Militia in East Deir ez-Zor”, The Syrian Observer, July 19, 2019. 3 The Syrian Regime’s Oil and Gas Crisis Vehicles queue in a long line for oil and propane tanks following oil shortages in Assad regime controlled areas including Aleppo, Latakia, Damascus and Hama own center of Hama, Syria. oil derivatives to the SDF-controlled “Energy ces. According to the sources, the US has al- Authority of the Self-Administration” ruling legedly ordered the SDF to stop supplying north-east Syria. However, several factors oil to areas under the control of the Syrian have recently contributed to reducing or regime at the end of December 2020. Accor- stopping the transfer of oil from the SDF ding to the Syria TV opposition website11, areas with one of them being the renewed quoting one of the engineers of the Rmelan attacks conducted by ISIS against oil tanks oil field, the oil fields in Hasakah and Deir Al- which increased significantly in 2020, and at Zour governorates have significantly reduced the beginning of 2021. These attacks led to production. The source added that the transfer the destruction of dozens of tanks, and, des- of oil continues to be carried, albeit in a pite the Qaterji militia’s investment in increasing much more limited way, by tanks owned by its effort to protect its armed convoys ac- the Al-Qaterji Company, as well as through companying the tanks, this did not succeed at pipelines on both sides of the Euphrates definitely preventing the attacks to occur. River with several restrictions. Within this context, the amount of oil available now to A second reason may be related to the ex- the Syrian regime is not sufficient to fulfil ternal pressure put by the US on the SDF as local needs, as confirmed12 by the Prime Mi- claimed by pro-regime and opposition sour- nister Arnous of Oil which estimated that in 11 “Washington Asks the Autonomous Administration to Stop Exporting Oil to The Assad Regime”, Syria TV, December 2, 2020. 12 Zyoud B., “During His Presence at The Third Session of the General Federation Council of Trade Unions, Engineer Arnous: The Government Has Spared No Effort to Improve the Services and Living Conditions” Al-Thawra Online, April 12, 2021. 4 policy brief 163 Suhail al-Ghazi 2021 the daily oil needs amo- published a list of companies unted to 200,000 barrels, while that violated the warning. In the daily production was equi- April 2019, the then-Syrian Pri- valent to only 20,000 barrels. me Minister Imad Khamis said14 that Egypt had not allowed oil This large gap aggravated the tankers heading to Syria to cross crisis and pushed the Assad the Suez Canal for 6 months, regime to find a solution by uti- which, at that time, was the lizing its credited line with Iran, main factor that caused this which was established13 in May suffocating crisis. However, the 2013 with a value of 3.6 billion accusation by Imad Khamis was A third factor that dollars and consisted in the immediately denied15 by the caused the recent shipment of 2-3 million tons of Egyptian government, through crisis is given by the oil per month from Iran to Syria. an official statement from the regime’s inability to However, also the arrival of Information Office of the Egyp- rehabilitate old oil shipments to Syria has started tian Cabinet, which said that refineries, in to face more challenges and the navigation movement is addition to the become increasingly expensive proceeding under international for the Syrian regime’s pocket frequent military agreements and treaties. Fol- affected by 10 years of war. attacks against lowing the Suez Canal blockage These challenges coincided them. As of now, in late March, Syrian PM Arnous with the start of Trump’s Presi- the Syrian regime said16 the government will adopt dency and his decision to im- holds control of the a rationing plan because the pose sanctions on Iran which two oil refineries, blockage is delaying the deli- aimed at preventing it from ex- one in Baniyas and very of oil tankers from Iran porting oil.