Syria has just announced that it will be allowing the Russian oil company “Soyuzneftegaz” to explore Syrian waters for oil and gas.
The agreement was signed by Suleiman Abbas (Syria’s Oil Minister), Syria’s General Petroleum Company, and Soyuzneftegaz.
The contract grants the Russian company Soyuzneftegaz the right to explore 2,190 square kilometres of the Mediterranean for 25 years.
Ali Abbas told the AFP that this “is the first ever for oil and gas exploration in Syria’s waters.”
Mr Abbas said:
“It will be financed by Russia, and should oil and gas be discovered in commercial quantities, Moscow will recover the exploration costs.”
According to the Syrian Arab News Agency:
“The contract stipulates for beginning with surveys in the area and preparing studies to pinpoint potential drilling sites, with this stage costing over USD 15 million.”
The uprising against President Bashar al-Assad in 2011 resulted in Syrian oil production to severely drop (by around 90 percent). Gas production suffered too (falling by nearly 45 percent).
A lot of Syrian oil fields are in the northeastern parts of the country – where rebel groups have a strong holding.
Russia’s Ambassador to Syria, Azamat Kulmuhametov, said that the deal highlights the strong economic relationship between the two countries.
According to a Voice of Russia article, Vice President of the Center of Political Conjuncture, Dmitry Abzalov, said the following about the project:
“First of all, it should be noted that the volume of oil extraction in Syria is not as large as, say, in Russia. On the other hand, I believe that this project has very good prospectives. And, taking into account the deposit’s geographic location, investments in the development of oil production in Syria may become quite large.”
He added:
“Because of the project’s low prime cost, its profitability may be much higher in comparison with other counties of the Middle East – if military and political risks become lower.”