LONDON: Escalating violence in Syria has targeted oil-related facilities, but for now foreign firms are doing business as usual in a nation whose economy is reliant on crude, said a director at British oil explorer Gulfsands Petroleum.
“The situation is obviously rather fluid,” said Ken Judge, director of corporate development and communications, speaking after one of his frequent trips to Syria.
Citing evidence that Islamic extremists had infiltrated protests against President Bashar Assad’s 11-year rule, he noted they had attacked government buildings and oil-related facilities “in recent days,” but said so far disruption had been avoided.
“Whilst security is maintained at these facilities, we will remain able to operate our business,” he said.
Asked about the likelihood of sanctions against Syria’s oil business, he referred to the EU decision Tuesday to amend a list of those targeted by asset freezes and travel bans.
The sanctions, he said, were not “additional sanctions, but the naming of additional persons.”
Analysts have said the appetite for direct sanctions on Syria’s oil industry is limited as oil at above $115 a barrel for Brent crude has reached a level economists have argued is damaging for the world’s fragile economy.
Focused on the Middle East and North Africa, Gulfsands is active in Syria, Tunisia and Iraq.
In Syria, it operates a production-sharing contract in Block 26, in which it has a 50 percent interest. The other 50 percent interest is held by Chinese oil group Sinochem.
The contract covers the Khurbet East and Yousefieh fields, where Gulfsands plans to increase production to 24,000 barrels per day by the end of this year from 21,000 bpd now.
Syria as a whole needs to increase its oil production to 600,000 bpd by 2015 from around 390,000 bpd to meet the requirements of its economic plan, Judge said, adding talks with Iraq on importing oil were ongoing.
Foreign operators had been lured since Syria opened to them in 2003 by what Judge referred to as fiscal terms that are “the best of any country in the Middle East” and efficient bureaucracy.
Judge cited an instance of its taking only eight days to get approval for 35-year oil exploration contract in Syria.
Gulfsands also has the advantage of very low production costs in Syria – “about $2 a barrel,” said Judge.
Gulfsands and other foreign oil companies are awaiting results of a December 2010 onshore licensing round and are poised for an offshore round scheduled for early October.
“Present indications are that there will be a significant number of prospective licensees,” Judge said.
Looking to the long term, Judge said he was confident production-sharing agreements, which Gulfsands and more than 25 other contractors hold with the Syrian government, would be honored.