Syria’s new administration seeks lifting of energy sanctions to revive economy

The overthrow of 61-year-old Baathist regime in Syria has brought to the forefront concerns about how the Syrian population will meet its energy needs following Iran’s decision to halt crude oil shipments to Damascus and raised questions about the future trajectory of sanctions in the region.

Since the outbreak of the civil war in 2011, Western countries have implemented restrictive policies targeting Syria’s energy sector in response to the regime’s repression of civilians, which has left Syria heavily dependent on Iran for fuel supplies.

Following the overthrow of the regime, Iran, which had long supported Syria’s repressive Baathist government and supplied the region with around 70,000 barrels of oil per day during the regime’s rule, ceased fuel shipments to Damascus. As a result, the operations of Baniyas, the country’s largest oil refinery, which processed between 90,000 and 100,000 barrels of crude daily, were severely disrupted.

According to international news sources, the refinery’s general manager, Ibrahim Mousallem, stated that Syria’s new government is awaiting the removal of sanctions imposed on the country, which would allow Syria to import oil from sources other than Iran.

These statements have strengthened expectations that sanctions in the region might ease in the near future.

– Sanctions and PKK/YPG presence trap Syria in deepening oil crisis

The European Union (EU) has imposed sanctions on a total of 318 individuals and 86 entities in response to the violent repression of the civilian population by the Assad regime. These sanctions include measures such as a ban on the import of crude oil and petroleum products from Syria, as well as restrictions on investments in the Syrian oil industry.

Additionally, the sanctions include a ban on investments in the construction of new power plants in Syria, restrictions on providing technical or financial assistance for the construction of such plants, and limitations on the export of equipment necessary for the oil and natural gas industries to Syria.

In addition to EU countries, the US also imposed a ban in August 2011 on the import of Syrian-origin oil and petroleum products in response to the regime’s repressive practices in the region. The sanctions also prohibited US citizens from engaging in transactions related to Syrian oil or petroleum products.

Meanwhile, the regime’s allowance for the PKK/YPG to occupy certain areas led to the terrorist group seizing control of the region’s oil resources, resulting in Syria being deprived of the revenue it once derived from these sources.

While the US administration continued to enforce so-called Caesar sanctions on Syria’s Assad regime, the terrorist YPG/PKK was selling most of its crude and processed oil to the regime. The terrorist group was generating over $1.2 billion annually from oil sales to both the Assad regime and northern Iraq. According to estimates, the PKK/YPG was appropriating around $2.5 billion worth of oil from the Syrian people each year.

– Easing Western sanctions crucial for restoring stability in Syria

The solution for Syria’s oil production to return to its former levels lies in the easing of sanctions by Western countries, Richard Bronze, Head of Geopolitics at the think tank Energy Aspects, told Anadolu.

Bronze cited that the Baniyas oil refinery would need a new source of crude to continue its operations and cautioned that, without an alternative solution, the fuel shortage in the region would deepen.

“It would require an easing of Western sanctions and the security situation to become reasonably stable in the key oil producing areas, but even if both of these happen, international oil companies will still need to assess whether the opportunities are attractive enough to justify returning to Syria and making investments,” Bronze said.

Bronze noted that the new Syrian authorities could seek international assistance to overcome these challenges, explaining that short-term support might include supplies or purchases financed by loans with favorable payment terms. However, in the longer term, he emphasized that the focus would shift to rehabilitating Syria’s oil sector as part of the broader reconstruction effort.

Emphasizing that Türkiye could play a role in supporting the new administration in Damascus, Bronze marked that Turkish companies would primarily assess reconstruction opportunities from a commercial perspective, which will be heavily influenced by how the financial and security situation evolves in the next few months.

– Türkiye could play key role in supporting Syria’s energy security

Francesco Sassi, a Bologna-based research fellow in energy geopolitics and markets at Ricerche Industriali ed Energetiche (RIE), pointed out that for Syria’s new government to maintain its legitimacy in securing energy without Iranian oil, alternative sources must be found.

Sassi highlighted that Türkiye could be called upon to intervene in order to support Damascus, ‘However, Türkiye is not a country with abundant oil reserves like Iran or Iraq. Türkiye is an oil-importing country, but it could mediate alternative agreements to ensure a stable supply to the Baniyas oil refinery,’ he continued.

At this point, Sassi marked the importance of ensuring Syria’s oil supply security, adding that failure to achieve this would lead to the country’s further destabilization.

• Ricerche Industriali ed Energetiche (RIE)
• Syria
• UK