Palmyra gas deal nears

07 August 2004
An $800 million deal to develop non-associated gas reserves in the Palmyra region could be signed in early September. An outline agreement for the 20-year production sharing agreement to develop the Palmyra middle area was reached in June by the selected bidder, a group led by Petro-Canada, and is being reviewed by officials at the Petroleum & Mineral Resources Ministry.

'There are a lot of little issues to be resolved, but the prognosis is that it will be signed in early September,' says a source close to the project.

The group, which includes the US' Occidental Petroleum Corporationand Jersey-registered Petrofac Resources International, was selected in April to hold exclusive negotiations for the contract that aims to boost Syria's gas production by 35 per cent to 35 million cubic metres a day (cm/d - MEED 9:4:04).

The group will be required to develop natural gas production capacity in the area to 9 million cm/d within 42 months of the deal being ratified. This includes the development in the first 30 months of three fields in the south of the contract area to capacity of 6 million cm/d. It also covers the development of four fields in the north of the area to a production capacity of 3 million cm/d in the following 12 months. The scheme also calls for the appraisal and development of a further eight gas fields by the end of the contract.

Within the consortium, Petro-Canada holds a 45 per cent stake and is the operator. Occidental has a 35 per cent stake and Petrofac 20 per cent. Occidental's role is unaffected by US sanctions imposed on Syria in May, as they do not apply to investments in the country, only to the supply of goods.

The gas will be sold to state-owned Syrian Petroleum Company, which is expected to deliver it to power stations. Fifty per cent of generation feedstock requirements are currently met by gas. The ministry aims to raise this to 75 per cent over the medium term.

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