Russia to restore Syrian oil and gas infrastructure
It will also have exclusive rights to produce oil and gas in Syria
According to a recent agreement, Russia will help Syria rehabilitate its oil and gas industry destroyed by the ongoing Civil War. Besides restoring damaged rigs and infrastructure, Russia will provide energy advisory support and train a new generation of workers. As a result, Moscow will get exclusive rights to produce oil and gas and consolidate its interests in the Middle East.
At the end of January, Moscow and Damascus signed an energy cooperation framework agreement giving Russia exclusive rights to produce oil and gas in Syria, reports Oilprice.com. Currently, the Syrian energy sector is seriously damaged by the Civil War. The country produces only 14-15,000 barrels of oil per day. By comparison, before the beginning of the conflict, the output totalled about 380,000 bpd, while an all-time peak amounted to 677,000 in 2002. The national gas industry suffered less: the output here has declined from 8 BCm/year to 3,5 BCm/year. The Syrian government took extra care to retake gas fields first because gas is much more significant for the domestic economy. While oil was either refined domestically or exported, 90% of the local gas output was used for electricity production.
Initially, it was supposed that Iran would also help Syria to rebuild its oil and gas sector. Last September, the two countries signed a number of agreements that involved the reconstruction of local refineries and the damaged power grid. However, the project is an open question now due to political and economic issues. Tehran itself isn't able to invest heavily in Syria's infrastructure, so it counted upon an Iran-Venezuela-Syria consortium, but against the current problems in Venezuela, a new solution ought to be found. Besides, Iran's Revolutionary Guard has already secured the Syrian telecommunications sector.
European companies are unlikely to help Syria due to the EU embargo, which is in effect until 1 June 2018 and will be probably prolonged by Brussels. Earlier, most of Syria's oil export was destined to Europe, but this is no longer possible as long as the EU ban remains in force. The new owner would have to find new markets, for example, in adjacent countries or in Asia. Moscow, which is already under sanctions itself, could cope with this task.
The cost of rebuilding Syria's oil and gas sector is rather high: the International Monetary Fund estimated it at $27bn in 2015, but now the amount has probably reached $35–40bn. This includes the totality of rigs, pipelines, pumping stations etc. to be restored and put back into operation.
There has been no information so far on the companies that could participate in bringing Syria's energy sector back to life. According to Oilprice.com, Tatarstan-based Tatneft seems to be an obvious candidate since it has already tried to make business in the country but halted the activity because of the war. Thus, the company is interested in returning to Syria once conditions allow for it. It's still unclear if other major producers would want to join in.