US initiates removal of Syria's terrorist designation in boost to oil, gas sector

The US has begun the process of removing its terrorism designation on Syria, which would lift the final sanctions barrier to restoring the Mediterranean oil and gas producer to its former heights.

Once removed, trade and banking restrictions would be lifted, allowing Syria's lifeblood energy industry to receive needed investment to rebuild damaged fields, repair pipelines and expand its refineries.

The country, which has begun to resume regular crude exports after more than a decade of civil war, is aiming to transform into an oil and gas distribution hub, prioritizing loading capacity and production, Syrian officials have said.

The move to cancel the terrorism designation, announced informally by President Donald Trump on the sidelines of the NATO summit July 9 and later confirmed by a statement from US Secretary of State Marco Rubio, initiates a 45-day window for the US Congress to weigh in, before it can be finalized.

"Lifting sanctions on Syria will unlock international trade and investment, give Syria a chance to rebuild, and open up a new chapter for the Syrian people," Rubio said in a statement. "A stable, unified Syria at peace with itself and its neighbors benefits not only the region, but the entire world."

A raft of international companies, ranging from oil majors like TotalEnergies and Chevron to smaller independents, has signed preliminary deals to reengage with Syria, but the terrorism designation has largely prevented more concrete investment.

The World Bank has estimated that the reconstruction bill will be around $216 billion, with infrastructure accounting for about half of that amount.

Syria's energy ministry did not respond to a request for comment.

Syria exported about 115,000 b/d of crude in June – a significant bump from the sporadic cargoes shipped over the last year -- according to tracking data from S&P Global Commodities at Sea.

It produced around 380,000 b/d of crude prior to the onset of civil war in 2011 and exported some 109,000 b/d in 2010, predominantly to Europe, according to the International Energy Agency.

Syrian Light was a light (36-38 API), medium-sulfur content crude that competed with other Mediterranean light sour blends such as Russia's Urals and Azeri Light in European refineries. Syrian Heavy, or Souedie, was a heavy (22-26 API), sour crude that competed with Middle Eastern grades, including Iranian Heavy, and was sought by European refiners as feedstock.

Platts, part of S&P Global Energy, assessed Syrian Light and Syrian Heavy crude, but discontinued the assessments in 2022 after exports dried up.

Syria Petroleum Company chief Yousef Qiblawy said June 9 at an event in Washington that the country is aiming to pump 1 million b/d by 2030, with some 15 to 17 greenfield exploration blocks to be offered for development.

Syria's refinery at Baniyas is due to undergo a major overhaul, raising its capacity to 130,000 b/d by October, up from 90,000 to 95,000 b/d, Qiblawy said.

Gas produced from offshore fields could eventually be exported to neighboring countries and wider Europe, he added.