Diplomacy Efforts Fuel Hope of a Revival in Syrian Oil

DAMASCUS — Oil-industry executives here anticipate a surge of interest by international petroleum companies amid a recent thaw in the country’s diplomatic relations with the West.

Syria has never been a huge oil producer, with output peaking in the late 1990s at close to 600,000 barrels a day, then dwindling to below 400,000 today. That is just a trickle for giants such as Exxon Mobil Corp. and BP PLC, which are watching for openings in super-producer Iraq next door.
Still, Syria’s location on the Mediterranean and its relatively unexplored geology make it a potentially profitable frontier for smaller international companies. Mtanios Habib, a former Syrian oil minister, says the country holds significant potential, including oil-sands reserves on the Jordanian border. He says 40% of Syria’s land hasn’t been explored.

The country’s near-pariah status in recent years kept out most companies. Now, improved relations with Washington and other Western capitals, along with recent oil discoveries, are fueling hope that foreign companies might help to revive the industry.

Syria needs the foreign know-how. Oil accounted for 17% of government revenue in 2007, according to the International Monetary Fund. But short-term Syrian forecasts predict steep declines — as much as 25,000 barrels a day of lost production each year — if new fields aren’t found or extraction technology isn’t improved.

Since 2000, Damascus has opened up swathes of the country to exploration by foreigners, and Chinese, Indian and Russian companies have entered the market.

Wall Street Journal (through Google News)