The early signs of an energy investment revival are clear, but risk still lies in some of the same forces that tore the country apart, writes Bachar Halabi
Dubai, 28 November (Argus) — Syria’s energy sector is re-emerging as a focal point for regional and international investment after more than a decade of war and isolation, with major gas, power and upstream initiatives accelerating since US and European sanctions were partially suspended earlier this year.
The first sustained efforts are under way since the fall of Bashar al-Assad’s regime late last year to rebuild the country’s electricity system and revive domestic oil and gas production, drawing in Gulf states, Turkish operators, US energy service firms and multilateral institutions. This also underscores Syria’s geostrategic realignment in the Arab world and the Levant. But the scale of the challenge is vast and the devil lies in the politics.
The country’s electricity generation capacity has collapsed from around 9.5GW before the 2011 conflict to just 1.6GW today, according to UN data. Over 70pc of power plants and transmission lines are severely damaged, and years of underinvestment have left the grid able to deliver only 2–4 hours of electricity a day in many areas. Oil and gas output has plummeted. Crude production is currently at 90,000–120,000 b/d, down from over 400,000 b/d pre-2011, while natural gas supply fell to around 3bn m³/yr in 2023 from 8.7bn m³/yr in 2011.
Syrian authorities estimate the country needs over $30bn to rehabilitate its oil, gas, mineral, electricity and water sectors, including roughly $10bn urgently required for power generation, transmission and distribution. A newly consolidated energy ministry has been charged with rebuilding the energy system, re-establishing regulatory oversight and co-ordinating foreign investment. But the level of corruption that took hold in wartime remains a potential challenge in this new era.
The most visible energy development is the emergence of large-scale, foreign-funded power projects, unlike anything Syria witnessed during the Assad era. The energy ministry signed $7bn of investment and power-purchase agreements (PPAs) in November with a consortium led by Qatar’s UCC Holding that brought together Turkey’s Kalyon GIS Energy and Cengiz Energy, and US-based Power International. The package includes 5GW of new capacity, four combined-cycle gas turbine (CCGT) plants — North Aleppo (1.2GW), Deir Ezzor (1GW), Zayzoun (1GW) and Mhardeh (800MW) — and 1GW of solar photovoltaic capacity across Aleppo, Homs and Deir Ezzor. Structured as a public-private partnership, the deal is the first major international investment in Syria’s power sector since 2011 and sets a template for future independent power projects.
The consortium is finalising build-own-operate and build-operate-transfer structures, long-term PPAs and government guarantees to enable phased financing. Construction timelines range from under two years for the solar parks to around three years for the CCGTs, once financing closes. The US is shaping the reconstruction effort. US sanctions on Syria’s energy sector were lifted at the end of June, and Baker Hughes, Hunt Energy and Argent LNG have been mandated to develop a comprehensive “energy and power generation masterplan” for gas, oil and electricity infrastructure in government-held areas west of the Euphrates.
Upstream activity is likewise restarting.
In November, following the visit of Syrian president Ahmad al-Sharaa to the White House, state-run Syrian Petroleum signed an initial agreement with US oil firm ConocoPhillips and US-based Novaterra Energy to develop existing gas fields and undertake new exploration. The companies aim to add 4mn–5mn m³/d of new gas production within a year, contributing to Damascus’ target of reaching 22mn m³/d — the volume required to fully fuel Syria’s thermal power fleet. Other firms, including UK-based Gulfsands Petroleum and Russia’s Tatneft, have held talks to reinstate suspended operations.
But without reliable supply, even the least ambitious CCGT buildout will stall, so Syria is taking a three-pronged approach. The first centres on imports through the Turkey–Azerbaijan route. Azerbaijan’s state-owned Socar said on 2 August that it would export 1.2bn m³/yr to Syria using a repaired pipeline linking Kilis in southern Turkey to Aleppo. Initial flows of 3.4mn m³/d are intended for the refurbished Aleppo power plant, with capacity expandable to 6mn m³/d as downstream infrastructure is completed.
The second prong involves imports from Qatar via the Arab Gas Pipeline. Qatar pledged deliveries in March via the Jordan–Syria segment of the line, which officials say is operational and undergoing upgrades inside Syria. Authorities say the line has been connected to Turkey, for potential north–south interoperability.
The third prong is domestic output recovery. The ConocoPhillips–Novaterra agreement and smaller rehabilitation efforts in central and southern fields aim to stabilise supply. Abu Dhabi-listed Dana Gas has signed an agreement to redevelop and expand several gas fields in central Syria. Together, these supplies will support the new CCGT capacity and stabilise legacy power plants.
Sanctions relief is also reshaping Syria’s crude supply patterns, indicating the broader geopolitical repositioning under way. The state-owned Banias refinery, with around 140,000 b/d of capacity, relied almost exclusively on Iranian and then Russian supplies after 2012. But those flows are shifting as Damascus aims to diversify its imports to end its single-source dependency, which often comes with a political price. Syria has imported 48,000 b/d of crude this year, with 89pc of this Russian Arctic grades and the remainder its first post-sanction Saudi crude deliveries. The latter reflect Syria’s agreement in September with the Saudi Fund for Development for a 1.65mn bl crude grant, delivered in two cargoes this month. It is unclear whether Saudi Arabia intends to keep those flows running.
But the return of Mideast Gulf energy imports signals deeper regional engagement. Saudi Arabia, Qatar, Turkey and the UAE are all seeking economic footholds in Syria’s reconstruction, while western governments frame the country’s recovery as an opportunity to reduce Iranian and Russian influence in the Levant.
Equally importantly, multilateral institutions are re-entering the country after decades of disengagement. The World Bank in June approved a $146mn grant to rehabilitate two 400kV transmission lines linking Syria with Jordan and Turkey — its first money for the country in nearly four decades.
Yet the return of foreign capital does not guarantee smooth reconstruction. The emerging investment must contend with the structural realities of a fragmented state, creating a new layer of political and operational risk. Security hazards also persist, not least internal violence and continued Israeli airstrikes.
Then there is the division between government-held areas and eastern regions under Syrian-Kurdish influence, where most oil and gas reserves lie, complicating efforts to recreate a unified regulatory and financial framework. Questions also arise over the durability of contracts signed with a transitional government that is not formally representative and that is still attempting to assert control.
The early contours of Syria’s energy revival are unmistakable. But the reconstruction and rehabilitation effort remains hostage to the same forces that fractured Syria in the first place — unaccountable authority, volatile security and an unsettled political transition. The next few years will determine whether Syria’s energy reset is a foundation for long-term stability or a fragile alignment vulnerable to the region’s shifting power dynamics.
