Construction tenders for Syria’s 140,000 barrel a day Al-Faraqlus refinery are expected to be issued late next year with contracts awarded in 2012. But there is now little optimism that the $4bn-plus refining venture, which brings together three foreign partners in Syria will move forward in this time.
A number of initial agreements have been signed, with Iranian, Venezuelan and Malaysian companies, but there are few signs progress on the project. Interest is waning with planned investors now short of cash. Growing pressure on Tehran’s budget from falling oil revenues will make Iranian involvement difficult. The fact that much of the projects crude feedstock has been pledged by Venezuela, has left some feeling that the project may be little more than a showpiece for political solidarity.
It would be disappointing if this is the case. The country faces a rising import bill and the new refinery would go some way to easing this burden. Demand for refined products runs close to 300,000 b/d, and Syria has to import almost half of this, as its ageing refineries run well short of their designed capacity of 240,000 b/d. Built in the 1960s the quality of fuel produced from the Homs and Baniyas refineries is also low.
At the same time, Damascus is developing its domestic and imported gas capacity to help meet the growing power generation needs. It also plans to switch from oil based to gas based power by the middle of the decade. If successful this should leave it with a substantial fuel oil surplus, which it can either refine or export. Most Syrians would prefer it to stay in the country, but an overhaul of its downstream sector will be needed.
Syria’s recent track record in getting downstream projects moving, however, does not inspire confidence. While it would be unfair to totally write off the country’s downstream project prospects, there has been a lot more talk than action in Damascus in recent years.