SYRIA - Planned Expansions & Cost Obstacle.

Speaking on the sidelines of an OAPEC conference in Doha, Qatar, Syrian Oil and Mineral Resources Minister Sufian Allaw in late 2007 said the government was going ahead with plans for three new oil refineries. These, he said, would have a combined throughput capacity of 380,000 b/d, enabling the sector to reach a 620,000 b/d capacity in the next decade.

However, project costs worldwide have risen more than five-fold since 2002, in some cases much more. For example, the cost of building a 400,000 b/d heavy conversion refinery in Saudi Arabia has risen to more than $13 bn, compared to an estimate of about $6 bn in 2006. Several refining projects in the Middle East have been either postponed or cancelled as a result because of the cost obstacle. Therefore there is a question mark about Syria's new projects, some of which having been promoted for several years.

Allaw said he hoped to conclude negotiations with the state-owned China National Petroleum Corp (CNPC) for a 100,000 b/d refinery the oil-rich Deir ez-Zor region, in north-eastern Syria, adding: "The refinery will be 85% owned by CNPC".

CNPC is one of the partners in Syria's largest oil-producing venture, al-Furat Petroleum Co. (AFPC) whose output of Syrian Light in 2008 is to average 170,000 b/d, down from a peak of 405,000 b/d in 1994 (see omt11SyriaFieldsMar10-08).

The minister said plans were proceeding on another refinery in the Deir ez-Zor region, to be developed jointly with Kuwait's Noor Financial Investment Group. The Kuwaiti firm was then undertaking a feasibility study with Wood Mackenzie into a 140,000 b/d refinery, 51% of which may be offered to the private sector (see below).

In October 2007, Allaw signed a contract with his Iranian, Venezuelan and Malaysian counterparts to have a third refinery built in the Homs region in central Syria - then estimated to cost $2.6 bn - with a capacity of 140,000 b/d. He said this project was to be financed by each of the companies according to its share. The state-owned Petroleos de Venezuela (PDVSA) will own 33%, the National Iranian Oil Co. (NIOC) and the Bukhary Group of Malaysia will hold 26% each, and the SPC will own the remaining 15%. The refinery should be on stream by 2011/12.

Allaw said Syria was moving ahead with its refinery plans in an effort to reduce its dependence on fuel imports, mainly high quality gasoline and gasoil/diesel.