Syria’s war-ravaged oil sector faces tough road to recovery, analysts say

The Syrian government’s takeover of key oil and gas fields from the Kurdish-led Syrian Democratic Forces (SDF) in the country’s northeast has raised hopes for the revival of its dilapidated energy sector after years of war and international sanctions.

Syrian officials announced on Sunday that the government forces had taken control of several oilfields, including al-Omar, Syria’s largest, and the Conoco gas complex in the country’s north and northeast.

Damascus made the announcement after the United States-trained SDF agreed to relinquish control of Deir Az Zor, Raqqa and Hasakah governorates as part of a ceasefire deal.

While the return of Syria’s energy reserves to government control marks a pivotal moment for the country’s war-battered economy, Damascus will face hurdles ranging from damaged infrastructure to chronic underinvestment as it looks to kick production into high gear, according to industry experts.

“Despite the strategic importance of regaining oil and gas assets, translating sovereignty into production recovery will be gradual and technically complex,” Ahmad al-Dahik, an oil and gas expert based in Qatar, told media.

“Oil reservoirs have suffered from unregulated extraction and equipment damage, while pipelines and processing facilities require extensive rehabilitation. Gas, by contrast, is generally less capital-intensive to restore and directly linked to electricity generation, making it the most likely early recovery priority.”

Syria’s fossil fuel reserves

Syria holds an estimated 2.5 billion barrels of oil and 8.5 trillion cubic feet of natural gas, but the country’s energy sector has been in disarray since its descent into war following a brutal crackdown on largely peaceful antigovernment protests in 2011.

While Syria never ranked among the world’s top fossil fuel producers, the country’s pre-war output covered its domestic energy needs and generated significant revenues for government coffers. The country produced about 380,000 barrels of oil and about 25 million cubic metres of gas per day, generating 20-25 percent of state revenues.

By 2015, when much of Syria was controlled by ISIL (ISIS), production had plunged to an estimated 40,000bpd, according to an analysis by S&P Global Commodity Insights.

Output declined further following ISIL’s defeat by the SDF, standing between 15,000bpd and 30,000bpd in 2019, according to the market analysis firm.

“Rehabilitation and new exploration are possible but will take time, and require political stability and a clear regulatory framework,” Carole Nakhle, the CEO of advisory firm Crystol Energy, told media.

“Government control could allow more coordinated rehabilitation, but progress will depend on investment, expertise, and access to markets.”

Prospect of foreign investment

The US, European Union and the United Kingdom’s lifting of most sanctions on Syria in response to the fall of al-Assad’s regime in December 2024 has raised the prospect of an influx of investment by foreign companies, which played a central role in the country’s pre-war production.

Before the war, a joint venture between the state-run Syrian Petroleum Company (SPC), British multinational Shell, China National Petroleum Corporation and India’s Oil and Natural Gas Corporation was Syria’s single largest oil producer, accounting for more than one-quarter of production.

SPC CEO Youssef Qeblawi told reporters earlier this week that Shell had expressed its intention to fully withdraw from the al-Omar oilfield, though the British multinational has not publicly commented on its plans.

France’s TotalEnergies, UK’s Gulfsands Petroleum, China’s Sinochem and Canada’s Suncor Energy also oversaw energy projects in Syria until sanctions forced a halt to their operations.

The SPC has signed a slew of preliminary agreements or memorandums of understanding with foreign energy firms in recent months, including US-based ConocoPhillips, the UAE’s Dana Gas, Saudi Arabia’s Arabian Drilling, and Qatar’s UCC Holding.

In December, Syria and neighbouring Turkiye announced an agreement to strengthen energy cooperation, including through the restoration of a gas pipeline linking Aleppo and the Turkish city of Kilis.

Syrian President Ahmed al-Sharaa last month met representatives from Texas-based Chevron to discuss cooperation in the development of the country’s energy reserves.

Pivotal political and economic moment

David Butter, an analyst on the Middle East at Chatham House, said he expected UK-based Gulfsands to seek to restart its suspended operations at the Block 26 oilfields in Hasakah, while Egyptian companies such as Enppi and Petrojet could also be interested in investing in the sector.

“I would expect the Damascus government to look for private investment in the infrastructure of the east of Deir Az Zor fields and to issue tenders for some specific projects,” Butter told media.

“We could see Egyptian companies such as Enppi and Petrojet being involved in contracts.”

Nakhle of Crystol Energy said while Syria may be able to attract “smaller, adventurous investors”, leading companies could be reluctant to invest due to uncertainty around the country’s governance and security conditions. Sunday’s ceasefire hangs in the balance following reports of new fighting.

“In short, while Syria’s oil and gas sector has potential, rebuilding it will be slow, risky, and heavily dependent on policy, security, and investment conditions,” Nakhle said.

Al-Dahik said restoring Syria’s production to pre-2011 levels would likely take years even under favourable conditions.

“The restoration of state control over Syria’s main oil and gas assets is a pivotal political and economic moment. Yet hydrocarbons alone cannot drive recovery,” he said.