Photo: Natural Gas Europe
The world continues to watch as President Obama and his administration increase their lobbying efforts to convince the Congress and the international community to support a U.S. led military strike in Syria. President Obama went on a media blitz Monday and is expected to deliver his case to the nation today to launch a “limited” and “proportional” attack designed to “degrade” Syrian President Bashar al-Assad’s ability to use chemical weapons. The president admits the outcome from Congress may not go the way he desires.
The Russians, who have been notorious for stonewalling American plans, offered a proposal Monday, now supported by the Iranians and Chinese also, that calls for international monitors to take control of Syria’s chemical weapons and stave off any military action. The Syrian Foreign Minister Walid al-Moualem later said his government “welcomes Russia’s initiative, based on the Syrian government’s care about the lives of our people and security of our country.” President Obama said Russia’s proposal “could potentially be a significant breakthrough.”
In Syria, though, the country continues to crumble at the throes of the civil war that began 2011. More than 100,000 are dead. More than 5,000 Syrians flee their homes everyday on top of the two million refugees and four million displaced Syrians, according to the U.N. Between refugees and internally displaced people, there are more Syrians forcibly displaced now than people from any other country. The U.N. refugee agency called the situation a “human calamity.” And as we have become all too familiar with the images, there are the allegations that 1,429 men, women and children died as a result of a chemical weapons attack perpetrated by Assad on August 21.
“Failing to respond to this breach of this international norm would send a signal to rogue nations, authoritarian regimes and terrorist organizations that they can develop and use weapons of mass destruction and not pay a consequence,” President Obama said at the G20 in Saint Petersburg. During an interview aired Monday with Charlie Rose, Assad denied Obama’s assertions and said, “How can you talk about what happened if you don’t have evidences?”
Syria’s economy is also devastated
Syria is not an energy power player, like other countries in the region, but that is not to say it does not play a role. Syria is estimated to hold proved oil reserves of 2.5 billion barrels as of early 2013, according to the Oil and Gas Journal – for context that ranks about thirty fifth globally (different organizations have slightly different data). Its neighbor to the east, Iraq, is fifth globally with about 140 billion barrels of proved reserves.
Syria’s oil production levels have plummeted as a result of the civil war, western economic sanctions, limited domestic refining capacity and lack of investment. The oil fields and infrastructure have not actually been severely affected, but rather export opportunities have dwindled. Either side that “wins” the conflict realizes the importance of the oil industry for the economy and has limited conflict in those areas.
As of one year ago, direct and indirect costs of the civil war to the Syrian oil industry, controlled by the government, was approximately $2.9 billion, according to statements made by Syria’s Minister of Petroleum and Mineral Resources. The latest data from the EIA indicates that oil production in Syria was 153,000 barrels per day (bpd) in October 2012, dramatically down from an average oil production of approximately 400,000 bpd from 2008–2010. Production peaked in the mid-1990s at around 650,000 bpd, according to the World Bank. Most major oil companies started leaving Syria last year – only Russian companies remain for exploration. Syria first became a net exporter of oil by the 1980s.
Despite Syria’s rather small role in the oil markets, the greater fear is a military strike on Syria may enflame the region and major oil producers Iran, Iraq and Saudi Arabia could get drawn more directly into the conflict disrupting supplies and sending the price of oil soaring. Iraq, which produces more than 3 million bpd is in an increasingly bloody conflict with car bombings seemingly daily. Saudi Arabia, which wants Assad out, produces 10 million bpd. And Iran, one of Syria’s most important allies, produces more than 4 million bpd (around 90 million bpd are produced globally). Markets are already struggling to manage a loss of 3 million bpd as supplies decrease from Libya, sanctions take hold on Iran, pipeline theft in Nigeria, and the ongoing various attacks in Iraq.
That is not to mention that other non-state actors may retaliate to a strike and possibly damage vital infrastructure, including for energy.
Some Iraqi Shiites, for example, have publicly stated they would view a strike on Syria as their fight also and may cross the border to aid the Assad regime as they believe an attack would support a Sunni steered, al-Qaeda affiliated uprising. Other Iraqis spoke from the experience living through bombings saying military strikes bring more misery, hardship and further destabilizing of society.
Nevertheless, Syria is strategically located to be a key transit player in energy trade, especially for its neighbors to reach the Mediterranean and Europe, and this can be an engine for economic growth in the future.
Iran, Iraq and Syria signed a memorandum of understanding in 2011 for the construction of what would end up being the largest natural gas pipeline in the Middle East, carrying gas from Iran’s South Pars field to Europe through Iraq, Syria and Lebanon and under the Mediterranean. According to the Iranian Deputy Oil Minister, the project will cost $10 billion, take three to five years to complete after funding is secured, and carry 110 million cubic meters of gas a day. In February, the Iraqi oil minister was charged to move forward with the deal.
In the past, President Assad envisioned a “four seas” imperative for energy transit, connecting the Persian Gulf, the Black Sea, Caspian Sea and Mediterranean Sea. The bold idea never materialized and relied greatly on Turkey’s participation harnessing its geographic advantages; however their relationship soured drastically very quickly, and now Turkey is a major foe.
Needless to say, with the isolation of the government, sanctions, and foreign investment not willing to invest, little progress has been made in developing Syria into an energy transit hub as yet. If and when stability is restored, it would be wise to revive these ideas and seek out other options, so the country can prosper from its geographic advantage.
