SYRIA - The Energy Base Of Syria.

Syria is shifting to natural gas for domestic energy. Its oil production and reserves are declining. With a population now exceeding 21.5m and growing at 3.4% per annum, Damascus is concentrating on the gas sector for the country's energy needs. It is to import natural gas from Egypt, Iran, Iraq and Russia in an accelerated move to end its dependence on oil products which are heavily subsidised and have become a serious burden on the country's economy.

Applying a socialist system, with the regime being secular but increasingly controlled by the Shi'ite theocracy of Iran (see omt10SyriaGlobalPerspMar3-08), Syria faces huge problems and is compelled to maintain subsidies on basic items including fuels which in 2008 will cost the state about $7 bn.

Syria's economy has been in a bad shape for years, mainly since late April 2005 when it was forced to withdraw its troops from Lebanon. Trying desperately to regain control of Lebanon, however, the regime of Bashar al-Assad is engaged in a very expensive power game in defiance of both the Arab world and the West - a game far beyond its means (see news10-ArabLebSyrMar3-08). But its dependence on the theocracy of Iran can potentially be fatal for a regime trying to survive in the face of huge regional and international challenges, with President Mahmoud Ahmadi-Nejad on Feb. 28 having said Iran had become the strongest power on earth - yet he was due to visit US-controlled Iraq on March 2. Iran is squeezed between major regional powers functioning under a US umbrella; and the US is struggling (see sbme3-IraqTurkeyMar3-08).

Speaking on the sidelines of an OAPEC meeting in Doha, Qatar, Syrian Oil and Mineral Resources Minister Sufian Allaw in late 2007 said Syria (a member of OAPEC) hoped to stem the decline in the country's crude oil production with the award of EPSA to international oil companies (IOC). Bids were submitted in late 2007 and EPSA awards were due in the first quarter of 2008 (see gmt10SyriaGeoMar3-08). He said plans were underway to have three refineries built with a combined capacity of 380,000 b/d, which will raise Syria refining sector to 620,000 b/d - eventually which may mean more years than expected in view of delay in such projects since the 1990s (see DT No. 13).