Syria, Russia sign oil production agreement

Russian Ambassador Azmatullah Kulmohammadov, left, and Syrian Oil Minister Suleiman Abbas during an oil-agreement signing ceremony Wednesday in Damascus, Syria. (SANA / December 25, 2013)

AMMAN, Jordan -- The Syrian government has signed a joint development agreement with a Russian energy company to explore for oil in the Middle Eastern country's territorial waters off the Mediterranean coast, according to SANA, the Syrian state news agency.

The 25-year deal with SoyuzNefteGaz offers a badly needed source of cash to the government of Syrian President Bashar Assad and suggests that Russia has confidence in the regime's ability to survive Syria's civil war -- with or without Assad.

Syrian Oil Minister Suleiman Abbas hailed the agreement at a news conference as "a continuation of the fruitful cooperation" that Syria has had with Russian companies. Russia remains one of Syria's strongest allies.

The agreement will cover an 845-square-mile area stretching southward from the government stronghold city of Tartous to Banias, and extend about 45 miles into the Mediterranean.

Syria, which has been mired in a bloody conflict between forces loyal to Assad and armed  rebels since March 2011, has seen its oil production fall by more than 50% during that time, according to U.S. estimates, as the opposition has seized wells in the oil-rich eastern province of Deyr El-Zour near the Iraqi border.

The region covered by the Russian contract is considerably less vulnerable to rebel attack.

In addition to losing wells to rebel forces, the Assad government has faced attacks on the country's energy-delivery infrastructure. The most recent example occurred Wednesday night, when a gas line in the countryside near the capital, Damascus, was blown up for the third time this year, according to SANA.

Such attacks have further degraded Syria's production capabilities and frustrated its plans to be an energy transit country in the region.

"We are still operating and running several of the fields," Abbas said in response to questions about the state of oil installations in the eastern part of the country. He accused the European Union, without explanation, of legitimizing the "looting of Syrian petroleum" that, he said, is refined in primitive ways and smuggled through Turkey.

SoyuzNefteGaz is expected to spend $15 million for initial exploration before spending an additional $75 million to develop at least one well.

The exploration agreement, signed Wednesday, comes less than a month before the multilateral Geneva 2 conference, which is scheduled to begin Jan. 22 and is aimed at securing peace in Syria.

Fahed Khitaan, a political activist based in Amman, said the deal is not only an indicator that Russia believes in the stability of the Syrian government, but might have involved some tacit agreement with the United States.

"Russia is now sure that the regime will stay, even if Assad goes," he said. "Russia has always cared about its interests in Syria. The Americans may have accepted this deal in exchange for concessions that Russia may give in the political settlement in Syria."

The United States has been adamant that Assad must go, whereas Russia has historically been his patron.

First established in 2000, SoyuzNefteGaz had previously won government tenders to prospect for oil in the eastern parts of Syria in 2004 and was created "to enhance economic cooperation with former Soviet countries, the Middle East and North Africa," according to RIA Novosti, a Russian news agency. The company is headed by former Russian Energy Minister Yury Shafranik and has oil projects in Iraq and Uzbekistan.

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