US to remove sanctions on Syria, President Trump says, in lift to oil, gas sector

The US will lift all sanctions on Syria, President Donald Trump said May 13 in Riyadh, Saudi Arabia, offering hope that the war-torn country can rebuild its once-robust oil and gas sector.

"I will be ordering the cessation of sanctions on Syria to give them a chance at greatness," Trump said at the US-Saudi Investment Forum, adding that he had consulted with Saudi Crown Prince Mohammed bin Salman and Turkish President Recep Erdogan on the decision.

"The sanctions were brutal and crippling and served a purpose at the time, but now it's their time to shine. We're taking them all off," Trump said of the measures that bar conducting business with the Syrian government, its military and intelligence services.

The US has also maintained its designation of Hayat Tahrir al-Sham, the group now leading Syria, as a foreign terrorist organization, hampering its ability to negotiate deals with international companies.

Before the onset of its civil war in 2012, Syria pumped around 380,000 b/d to 400,000 b/d of crude, enough to meet domestic demand and supply some volumes to the international export market, as well as 316 MMcf/d of natural gas, according to the US Energy Information Administration.

But production has fallen to as low as 30,000 b/d in recent years, with war and neglect destroying much of its infrastructure, and leaving Syria dependent on Iran for supplies until former dictator Bashar al-Assad fled to Russia in early December. Syria also has two oil refineries at Banias and Homs, with production well below their combined 227,000 b/d capacity.

Syria's new leadership gained a six-month exemption from US sanctions in January, which permitted activities and transactions that ensure essential services, including allowing electricity, petroleum, petroleum products and natural gas to enter the country.

The UK and EU have eased their sanctions, but the US' retention of its measures has been a major barrier to Syria securing investment needed to rehabilitate its oil and gas sector, as well as secure supplies of fuel.

Most oil and gas fields in northeast Syria are in the hands of Kurdish-led Syrian Democratic Forces. On March 10, Damascus reached a breakthrough deal with the SDF, according to which the Syrian government will take over oil and gas fields and share revenues.

Turkey, which is said to have close ties to HTS, has provided electricity to Idlib province. Energy Minister Alparslan Bayraktar recently stated that Turkey is exploring how to utilize Syria's oil and natural gas resources for reconstruction and may consider sending more electricity.

Saudi Arabia's King Salman Humanitarian Aid and Relief Centre has also said it would send fuel aid. New Syrian leader Ahmed al-Sharaa was born in Saudi Arabia, and the Saudi Foreign Minister visited Syria in January as the Gulf country looks to rebalance power in the region away from Iran.

Regional opportunity

The decision to remove sanctions on Syria is an opportunity for both the US and the region, experts said during a May 13 webinar held by the Middle East Institute.

The US talks often about burden sharing, and Syria is a place where Gulf interests and investments are so pronounced that it is a great opportunity for burden sharing, Daniel Benaim, an associate fellow at MEI, said during the webinar.

"The most helpful thing that the United States could do is create an enabling sanctions environment for that to happen," said Benaim, who was the deputy assistant secretary of state for Arabian Peninsula affairs during the Biden Administration.

Syrian sanctions go back 40 years and include legislative sanctions that can only be removed by the US Congress, Benaim said. "But I think the removal of just about any of them is very important," he said.

Saudi Arabia has been making the case that a stable Syria would help Saudi Arabia achieve its economic ambitions, because it would allow projects, pipelines and goods transit from the Gulf to Turkey and Europe and vice versa, said Ibrahim Al-Assil, a senior fellow at MEI.

"Stabilizing Syria is key for the Gulf states, and Saudi Arabia in particular has been working so hard on this issue, on explaining that to their American counterparts, on highlighting this major issue, and acting as a gateway for Syria to the West and to the United States," he said.