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ECONOMIST INTELLIGENCE UNIT: Syria industry: Royal Dutch/Shell signs MoU to develop gas reserves

(EIU Viewswire Via Thomson Dialog NewsEdge) COUNTRY BRIEFING

The Royal Dutch/Shell Group has signed a memorandum of understanding with the Ministry of Petroleum calling for the development of gas reserves. According to Shell, the two sides will now work on identifying specific projects on which to collaborate.

Shell is the largest foreign investor in Syrias oil and gas industry, although output from its main interest, fields operated by Al-Furat Petroleum Company, is declining.

Shells net oil production from Syria fell to 30,000 barrels/day (b/d) in 2006 from 36,000 b/d the previous year. Syrias total output of oil (including condensates and natural gas liquids) slipped to 417,000 b/d last year, compared with 458,000 b/d in 2005, according to the latest BP Statistical Review of World Energy. According to that review, Syria has relatively modest gas reserves of some 10 trn cu ft, with natural gas output rising only gradually over the past few years to reach 5.5bn cu metres in 2006.

Russian contractors are now working on the development of gas fields in central Syria, which will eventually produce some 3.2bn cu metres/y. Hayan Petroleum Company, in which Croatias INA-Naftaplin is the main foreign partner, is also proceeding with a gasfield development project, and has invited bids by October 8th for the construction of the Jihar gas treatment plant (pre-qualification bids are due by July 10th). Another company looking to develop gas reserves is Petro-Canada, which last year acquired the interests of Marathon Petroleum, which made a number of gas discoveries in the early 1980s, but did not develop them.

The US Department of Energy (USDOE) reckons that about half of the countrys electricity is currently generated using fuel oil, indicating that oil exports could increase considerably if the Syria were able to substitute gas in power generation. Moreover, with the USDOE estimating that electricity demand is growing by 7% annually, Syrian officials must reckon that ensuring adequate future supplies of gas is also critical to the countrys longer term energy balance.

SOURCE: Business Middle East

Copyright 2007 Economist Intelligence Unit

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