Syria: Issues and Options
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Rep1)(uriN, 'iH2-SYR Syria:Issues and Options in the EnergySector Public Disclosure Authorized May 1986 Public Disclosure Authorized Public Disclosure Authorized Reportof the Joint UNDP/WorldBank Fnergy Sector Assessment Program Public Disclosure Authorized Thisdio" ument has a restrie ed (listribution. It! contents may not be disclosed without authorization from the Goverr. Tient. the UNDPor the World Bank. JOINT UNDP/WORLD BANK ENERGY SECTOR ASSESSMENT PROGRAM REPORTS ALREADY ISSUED Crolntrv Date Nunber ITndones:a November 1981 3543-IND Maurit ius fecember 1981 3510-MAS Kenya May 1982 3800-KE Sri Lanka May 198 2 3792-CE Z.mbabwe June 1982 3765-ZIM Hai t , .June 19R2 3h72-1HA Papua NPw GuInea June 1982 3882-PNG Bmirrmndi .Ttlne 1982 3778-Bll Rwanda June 1982 3779-RW M.,Iawi Aetigmmst1082 3903-MAL hanglatesh Oct ober 1982 3873-BD Z.am h Ma .lJanxiarv 1 611 n1n-ZA fuirkev March 1983 3877-TU Rol,v.n Aprl] 1983 4213-BO F,ij June 1983 4462-FIJ s1;it1imn Tlqlndi Juine lqR3 4404-SOL SSentgal July 1983 4182-SE SI4-ndn flv1R 451 1 -SU lirandm Jilly 1983 4453-UG N . ,. r . Algtist- I QR3 444f -TIN! Nepa.1 Auguist 1983 447 .- NEP r.:lmnh. NovYenber 1983 4743-CM le rn January 1984 4677-PE Cor; t P. rna .Taniiarv I1A4 4655-CR l.esot ho .Janmiary 1984 4676-LSo Svvchf ItIs .1iantiarv 19R4 4693-SEY M.-oroccl March 1984 4157-MOR Portnn,-il April 1Q84 4824-PO 'N.ge r Mav 1984 4642-NIR Fth.,pi. .F.lv 184 4741-ET rae, oVerdle Atigtist 1984 5(73-CV r:ll,,nea;i Rssntl Auigtust L1084 5083-GIIB Bot.;wana Septemher 1984 4998-BT Sr. .ncert n rid the u.remmadfincs September 1984 51l3-STV Sr . r.Lmmci;m Septe'mher 1984 5111-SLU P'araguatv (October 1984 5145-PA T;l n7;In.l : November 1944 4969-TA Yemen Arab Reptbl-1:. December 1984 4892-YAR lI her. December 1°R4 5279-LBR TIslam ic Hetpubl i ot amiur:tran:; April 1985 5224-MAU Apr.I 19595 5466-.JM Ivoary Co;ls; April 1985 5250-IVC Ren i.n Timell 14RS 5222-BEN Tn',n .6Jtlne 1985 5221-TO mr; Tll W t II .hinTe I 9A5 5577-VA Tonga k-ne 1985 5498-TON W'et.';r n :r.Tmne 19R5 5497-WSOJ 1m rnma .June 1985 5416-BA Th a iand Septemher 1985 5793-TH Sao Tome & PrIncipe October 1985 5803-STP Ecuador Decemnher 19R5 9865-EC Somalia December 1985 5796-SO BPurk.na January 19R6 573n-BIIR Zaire May 1486 5837-ZR FOR OFFICIAL USE ONLY Report No. 5822-Syr SYRIA ISSUES AND OPTIONS IN THE ENERGY SECTOR MAY1986 This is one of a series of reports of the Joint UNDP/World Bank Energy Sector Assessment Program. Finance for this work has been provided, in part, by the UNDP Energy Accounts and the work has been carried out by the World Bank. This report has a restricted distribution. Its contents may not be disclosed without authorization from the Government, the UNDP or the World Bank. ABSTRACT The rapid rise in energy demand of over 10Z per year during the last decade and the stable production of oil have sharply reduced net earnings from oil exports and contributed to the shortage of foreign exchange and to the slowdown in economic growth. Urgent action is required to increase energy supplies and slow the growth of demand. On the supply side action is required to accelerate the development of gas, maintain oil production in the oil fields, redirect exploration efforts, and change the pattern of refined product output to produce more middle distillates. In the electric power sector, prices should be increased, time of day pricing implemented, losses reduced and least cost devel- opment plans prepared and impLemented with emphasis on gas for power generation. There is scope to. increase efficiency in energy use, particularily in the domestic and industrial sectors. Two of the most important issues are accelerated gas development and action on electricityprices. An accelerated program of gas development could increase gas utilization (for use primarily as a substitute for fuel oil in power and industry) to one-third of the country's annual energy consumption by the early 1990s. Refinery modifications which would allow them to utilize surplus fuel oil for conversion into more valuable products, along with more flexibility in crude oil intake, would improve the overall profitability of refinery operations. In addition, substantial oil resources are present in the northeast oil fields and oil production could be maintained or even increased with technical inputs. The benefits of an accelerated program of gas development and efficiency improvements could amount to an estimated annual increase in the GDP growth rate of 1-2% over the next decade. Growth in electric power generation has been extraordinarily rapid, 18-21% per year over the last decade. This rapid growth is largely due to unusually low electricity prices, high commercial and technical losses and rapid growth in the number of new connections under the rural electrification program. Electricity prices have fallen in real terms and do not even cover operating costs, much less capital costs. Electricity prices need to be raised by an average of about 75% above inflation to cover short run costs as a first step toward economic pricing, then additional sales revenues of about SL 7.0 billion plus further savings of SL 3 to 4 billion could be expected through reduced investment and fuel requirements because of the likely impact of higher prices on electricity demand. The net government contribution to the sector's finances would drop to a much more manageable level. C EQUIVWS (as of end 1984) Currency Unit - Syrian Pound (SL) Official Rate US$1 = SL 3.95 SL 1 = $0.253 Parallel Narket Rate US$1 = SL 5.45 SL 1 = $0.183 Tourist Rate US$l - SL 8.0 SL 1 - $O.125 FISCAL YEAR January 1 - December 31 tOUVERSIOE FACTORS Fuel TOE/MetricTonne Million Kcal/Metric Tonne LPG 1.0588 10.8 Gasoline/Naphtha 1.0294 10.5 Kerosene 1.0098 10.3 Gas Oil 1.000 10.2 Fuel Oil 0.96 9.6 to 9.9 Gas 0.81 Other Petroleum Fuels 0.96 1 Kcal = 3.968 Btu 1 Kcal = 4.19 Kilojoules 1 toe = 10.2 million Kcal = 40.5 million Btu = 42.7 million Kilojoules 1 toe = 4,000 KWh on a thermal replacement basis PARTICULAR CONVERSION FACTORS FMR CAS 1 TCF (trillion cubic feet) gas = 28.3 billion m3 1 kg LPG = 1.829 liters 5CM wet gas x 0.873 = 1 Thousand toe SCM dry gas x 0.814 = 1 Thousand toe Gas use in: Cement - 0.24 BC0/yr for 5000 tonne per day plant (320 days/yr) Fertilizer - 1 tonne naphtha = 0.92 tonnes gas = 920 CM Power - SteAm - 34% efficiency, 10,000 Btu/kWh, 304 CM/kWh - Gas Turbine - 24U efficiency, 12,000 Btu/kWh, 365 CM/kWh - Combined Cycle - 43Z efficiency, 8,500 Btu/tkWh, 258 CM/kWh MMBTU - million Btu MCF = thousand cubic feet BCM = billion cubic meter This report is based on the findings of an energy assessment mission which visited Syria in February/March 1985. The members were N. Prasad (Consultant, Mission Leader), Dale Gray (Economist, Deputy Mission Leader), A. El-Mekkawy (Petroleum Engineer), J. Schweighauser (Geologist), W. Kupper (Consultant, Power Engineer), D. Spottiswood (Consultant, Gas Specialist), J. Wood (Con- sultant,-Engineer), J. Freidliffson (Consultant, Geothermal Specialist), A. Hunter (Consultant Refinery Specialist). Secretarial assistance was providedby Holly Mensing. TABLE OF COhhENTS PaEe SUMMARY AND RECOMMENDATIONS........................ .... ... i I. ENERGY AND THE ECONOMY OF SYRIA .................eseeese... 1 The Economy and the Current Economic Situation...i...... 1 Overview of the Energy Sector*........................... 3 II. ENERGY RESOURCES ..... .............. ...... 06 5 Introduction.. ......... 5 Petroleum and Gas Resources............................. 5 Producing Fields in NortheasternSyria................ 6 New Oil Discovery in Central Syria.................... 7 Gas in Northeast and Central Syria.................... 7 Shale Oil...................................... 8 Petroleum and Gas ExplorationActivities.....G........... 8 Petroleum Production....................... ........... 9 Hydroelectricity.................................... 0................ 10 Renewable Energy Resources.............................. 12 IIl. SUPPLY AND DEMAND FORECASTS........................ o........ ..... 13 Introductiono.o.oosae.....e.........e.....e......oe...ee....se...s. 13 1983 Energy Balance............. ........ *............... 13 Petroleum Product Demand.............................. 14 Level and Structure of Petroleum Product Prices....... 14 Petroleum Product Demand by Sector...................... 16 Transport Sector...................................... 17 Domestic and Comme_cial Sector................. 17 Agriculturee.eoe.o.eee ...............................19 Industry.............................................. 19 Petroleum Product Pricing and Energy Conservation....... 21 Energy Conservation................................... 23 Electric Power Demand....*.*....... s................ 25 Previous Forecasts of Electricity..... .................26 Analysis of Electricity Demand........................ 0 26 Energy Supply and Demand Forecasts for 1990 and 1995.. 30 Notes on 1983 Energy Balance...o...................... 35 Notes on 1990 Balance....................... *000 35 Notes on 1995 Energy Balance..e.. o................... 36 IV. PETROLEUMAND GAS SECTOR.................... e..e.eeee... ...37 Oil Production Srategy.....................................ee37 HeavyOil and EnhancedRecovery ..................... 38 Unit Costs and Investment................... 38 Recommendationson Oil Production ....... eee.........o 39 HydrocarbonExploration............................... 40 SPC ExplorationPlans, 1986-1990...................... 41 Recommendationson Hydrocarbon Exploration...........