Oil, Gas, and the Battle for the Homefront
On December 11, 2016, the Islamic State (IS) stormed the historic city of Palmyra in eastern Homs, setting off a firestorm of media attention.1.ISIS retakes ancient Syrian city of Palmyra : CNN2.Aleppo: Assad’s offensive on divided Syrian city handed Palmyra back to Isis and could spark new militant gains : The Independent3.The Fall of Aleppo Is a Huge Gift to ISIS : The Daily Beast
While the world focused on the iconic and ancient trading city, IS was also capturing a series of large gas fields to the northwest of Palmyra. Maher, Jihar, Shaer, and other gas fields were overrun by IS as part of the same offensive in eastern Homs. These seizures are significantly more important and will have a greater impact than the fall of Palmyra.
Historically, Syria has produced gas in abundance with a production rate in 2011 of approximately 21 million cubic meters per day.4.The War Over Syria’s Gas Fields : Carnegie, Middle East Centre5.Report : U.S. Energy information administration Because of this high output, much of Syria’s electricity grid was geared to operate on gas.6.The struggle over electricity : The Economist, Intelligence Unit7.https://twitter.com/Jacm212/status/807625532686774273 In addition, Syrians rely on gas for heating during the winter and for cooking fuel throughout the year.
During the first few years of the war, from 2012 to 2014, Syria’s oil production collapsed from an average output of 400,000 barrels per day (b/d) to a nearly negligible level.8.Why Russia And China Are Intent On Salvaging Syria’s Economy : OILPRICE.com However, during that same phase, gas production managed to stay surprisingly strong.9.Fuelling Conflict: Syria’s War for Oil and Gas : Carnegie, Middle East Centre This forced the government to increasingly rely on gas for electricity generation. By 2013, more than 90% of Syria’s remaining gas production was being used to generate electricity.10.Report : U.S. Energy information administration
Given the high rate of domestic production, not many people know that Syria has been a net importer of natural gas since 2008.11.Image, Syrian Energy Infrastructure : U.S. Energy information administration Although Syrian gas production has declined at a slower rate than oil due to the war, it still has declined. Shortages became apparent as early as 2012. Supply worsened when Syria’s only means of importing gas in significant quantities, the Arab Gas Pipeline, faced interruptions due to attacks in the Sinai. The pipeline was completely shut down in 2012.12.IMF Working Paper, Syria’s Conflict Economy : International Monetary Fund13.Sixth attack on Sinai gas pipeline : Globes
The lack of reported data makes it difficult to ascertain Syrian production levels in 2016, but it is clear that the situation was reaching a breaking point. Syrian government officials optimistically declared gas production to be around 8 million cubic meters just before the IS offensive in 2016, low enough that Syria also needed to import 800 tons of gas per day.14.Syrian Gas, 800 tons of daily gas needs importing : Aliqtisadi15.To fill the shortage .. Three gas carriers to Syria : Enab Baladi Costs for importing fuel reached 800 million Syrian pounds (SYP) daily in 2016 (US$1.6 million), with some projections estimating that costs in 2017 would increase to nearly one-fifth of the total national budget.16.El Khabar Black market prices for gas cylinders in government-controlled areas climbed to 40-50% higher than the official price. Some government officials stated that only 50-60% of demand was being satisfied.17.Gas: “Black” raises the price .. No successful government plans! : Kassioun Supply was tight enough that the delay of a single fuel ship in November caused extended power blackouts across the country.18.After the arrival of the fuel .. Does the system reduce the hours of rationing electricity? : Micro Syria19.Electricity: delay of fuel and not the money behind the increase in rationing hours : Syria Home News
Because of these increasing shortages, the Syrian government dedicated large amounts of resources to bringing more gas production on-line in the east Homs fields and was meeting increasing success through the end of 2016.20.Running a gas well in Homs with a production Capacity of 350,000m3 per day : Aliqtisadi This expansion was considered essential, as the economic outlook for 2017 was already bleak.21.Volume 3, Issue 2 : The Week in Review The importance of these gas fields is likely the reason why government forces continuously launched offensives in east Homs through the summer and fall of 2016, aiming at securing more of the fields in spite of the heavy and important fighting that garnered international attention in Aleppo and near Hama.22.VIDEO Shows Syrian Army Advancing in Al Shaer in Homs Against ISIS : Alalam News23.Clashes continue between regime forces and IS around Shaer field : The Syrian Observatory For Human Rights
It was under these circumstances that IS overran the major gas fields in eastern Homs in the beginning of December 2016. The Minister of Electricity, Zuheir Kharboutli, stated that over 3 million cubic meters of Syria’s remaining gas production had been lost with those fields, at least 40% of remaining production.24.Minister of Electricity from the “People’s Assembly” platform: new contracts to secure the fuel .. And a special office to monitor the fairness of codification … Kharbotli to homeland: Fighting corruption is a right demand, which is working in the ministry : Al-Watan
Electricity rationing tightened across Syria; Hama is officially at three hours per day in 45 minute spurts,25.https://twitter.com/Jacm212/status/814500104052805632 Tartous is at six hours per day with some areas only getting three,26.https://twitter.com/Jacm212/status/816684225453785088 while some areas near Damascus are only getting two hours of power per day.27.State-organised attacks in Palmyra threaten Damascus electricity : Enab Baladi Unofficially, many report that rationing has worsened since electricity theft and other issues have caused problems with supply.
Literally overnight on December 12, black market prices for cooking gas shot up.28.Increase the electricity rationing hours in Tartous and cut the current completely from the industrial zone : Al – Watan Black market gas prices have more than doubled in some areas such as Homs where they reached 10,000 SYP/cylinder this week, nearly four times the official price.29.Increase the electricity rationing hours in Tartous and cut the current completely from the industrial zone
: Al – Watan30.https://www.facebook.com/eqtsad/photos/pcb.1219803794771788/1219803358105165/?type=3#
For average Syrians, for whom loyalist media reported poverty rates reaching 83% in 2016,31.Coverage of 70 percent of the demand for gas … Oil says: there is a possibility to increase production! : Economy2Day32.Director of Gas Department of Al Watan: the conclusion of contracts for the supply of liquefied gas continues … Gas crisis in figures: 30% of the demand excess unconsolidated : Al – Watan these price increases have been devastating. Many Syrians are simply going without or resorting to burning what they can for heating and cooking, including animal faeces. To try to ease the burden, the Ministry of Oil and Resources announced that they would increase the production of gas cylinders from 100,000 cylinders per day to 135,000, although how they plan to do so remains uncertain.33.Al – Watan34.Syria at war: Five years on : United Nations, Economic and Social Commission Shortly after, Loyalist media in Tartous published complaints that new cylinders were being underfilled.35.Economy2Day
Through the end of December, Syrian forces and their allies built up around Tiyas airbase, seemingly positioned to retake the gas fields and help relax the ongoing shortages.36.Gas crisis continues Tartous fuel denies weight reduction .. Supply waiting for complaints : Tishreen However, hopes were dashed when IS detonated the Hayyan gas processing plant,37.https://pbs.twimg.com/media/C1bodQfXgAYXRiH.jpg a facility that had cost nearly 300 million Euro to construct. At its peak, the plant produced nearly 3.7 million cubic meters of gas daily and accounted for one third of Syria’s electricity supply.38.Millions without heat as ISIL explodes Syrian gas plant : WorldBulletin 39.IS blows up major gas plant in Syria’s Homs : The New Arab
It is unlikely that the facility can be rebuilt before the end of the war, leaving Syrians wondering how their fuel and gas needs will be met. Government officials have begun talking about securing new import contracts,40.Al – Watan but without a liquefied natural gas (LNG) terminal, and with the sole pipeline suitable for gas importation out of operation, Syria will struggle to import gas cheaply. Since LNG importation requires either pipelines or LNG terminals, Syria is instead forced to import compressed natural gas or propane at higher costs and with greater difficulty. Syria is already running record deficits. With their reserves depleted, and without additional Russian or Iranian financing or cutting elsewhere, Syria will not be able to afford an increase in imports.41.Syria’s currency crisis means big trouble for Bashar al-Assad’s war efforts : Quartz Perhaps even more worrying is the prospect of further IS advances in Homs. Syria’s only remaining major gas field, Rabah (including its vital remaining energy infrastructure such as the Ebla processing plant), is now dangerously close to the front lines.42.Ebla GTP : Wikimapia
This is part one of a three part series on the war for oil and gas on Syria’s home front – read part two here