The British Gulf Sands Company denounced the “illegal” production of oil in Syria from its fields subject to force majeure 6 years ago, stressing that it has a plan to return again to the country.
The company owns a 50% stake in Block 26, as its interests go back to before the war in Syria, but the sanctions imposed by the United Kingdom prevented it from operating in the region.
The conflict led to the closure of the fields and prompted Gulfsands and its Chinese partner, Sinochem, to exit after the declaration of force majeure, but the fields began producing oil again in 2017.
Since then, more than 41 million barrels of oil have been stolen, with a value of approximately $2.9 billion, according to a press release issued by the company, which was seen by the specialized energy platform.
“Illegal” oil production in Syria
Gulfsands CEO John Bell said that various local groups — including the Autonomous Administration of North and East Syria, the People’s Defense Unit, the Syrian Democratic Forces, and the Syrian Democratic Council — have taken control of the operation of the fields, and are producing “illegally.”
Gulfsands has estimated that Block 26 has been illegally producing about 20,000 barrels a day since 2017, which is only a small part of the total oil theft in the area.
She explained that production in northeastern Syria is currently estimated at 4 times these volumes, or about 80,000 barrels of oil per day, with a value of about $7 million per day at today’s oil prices.
“The sanctions were imposed 12 years ago, and the local people don’t see the benefits. Despite the sanctions, this illegal trade is allowed to continue, and the proceeds go to the local militia,” Bell added.
The following infographic – prepared by the specialized energy platform – shows the performance of the Syrian oil sector in the first half of 2022:
The Syrian people are not benefiting
“It is understood that these militias sell oil from northeastern Syria to both Damascus and Kurdistan,” Bell said, according to what was reported by the Energy Voice platform.
He added, “The biggest farce is that there is little or no benefit for the Syrian people because the oil is sold at such a discount that only the illegal middlemen benefit.”
The Office for the Coordination of Humanitarian Affairs stated that 14.6 million Syrians are in need of assistance, and that 90% live below the poverty line, and 80% suffer from food insecurity.
It is also estimated that there are about 5.4 million internally displaced persons inside Syria and about 5.6 million Syrian refugees in neighboring countries.
“What is troubling is that this illegal production is also causing utterly egregious pollution of the land, air and rivers… the environmental pollution is catastrophic,” Bill added, citing research from local NGOs.
Bell continued that some influential countries – including the United States and the United Kingdom – seem to be turning a blind eye to the problem. What encourages this illegal trade to continue.
“Project Hope” in Syria
Gulfsands has come up with a potential solution, which it calls Project Hope.
The company stated – in its statement – that the project is an initiative for humanitarian and economic stimulus, which would pave the way for international energy companies – all of which declared force majeure as a result of international sanctions – to return to operations in northeastern Syria.
Revenues from oil sales are deposited in internationally managed funds, and disbursed to finance early recovery projects and humanitarian and economic stimulus across the country, in line with the UN Security Council resolution and for the benefit of all Syrians who can benefit from the national resources of their country for its construction and development.
Gulfsands added, “With investment and experience, we estimate that production in northeastern Syria can increase from 80,000 barrels of oil per day to about 500,000 barrels per day, and achieve about $20 billion annually.”
This could finance hundreds of medical and educational facilities and economic initiatives, as well as provide thousands of job opportunities.
Return of Gulf Sands to Syria
Bell said the project would change this, allowing the company to return to business while resolving many related issues, as current sanctions and the absence of a political agreement prevent the company and its peers from operating in the Syrian oil sector.
Under the plan, Gulfsands and its peers can go back to their squares, with appropriate sanctions and other approvals, and can improve oilfield practices — minimizing impact on the environment — while also oil production, returning to operational control.
The companies would then sell the oil transparently through authorized dealers, who would pay the revenue into an escrow account, or direct it toward internationally acceptable ends.
Oil revenues could go to pay for humanitarian aid, for example, and this would reduce the aid bill for donor countries and provide a local link between production and benefits.
“It should be designed and supervised by the United Nations, or a similar neutral party,” Bell said. “We think we’ve proposed something that makes sense and meets an urgent need.”
He continued, “This is not political. We are trying to find a local solution to a humanitarian crisis that has been going on for a long time. It’s about vision and transparency, it’s time to change something.”
New investments in Syria
Thus, those who currently produce oil illegally will be the losers if this project is implemented, but the Syrian citizens will gain. More gains can also be achieved through new investments, according to Energy Voice.
“The company’s Block 26 could increase production – at the direction of Gulfsands – to 100,000 barrels per day,” Bell said. “For our oil fields, we know exactly what we’re going to do. We’ve spent the last 5 or 6 years working on the plans.”
At the regional level, Bell believes that the same can be applied and raise production to about 500 thousand barrels per day. This could generate between $15 and $20 billion in revenue annually, depending on the price of oil.
Gulfsands recently opened an office in Abu Dhabi, to be closer to the regional dialogue on Syria, and is also working on plans to expand its operations in the Middle East and North Africa region.
“There is a clear regional interest in resolving the crisis in Syria, which gives us some reasons for optimism,” Bell said.
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