There is growing concern in Syria about the gradual decline in the production of oil and oil derivatives making Syria an importer of oil rather than an exporter in other words creating a deficit in Syria's trade balance. Growing concern is also being raised on the effects of oil prices on the various sectors of the Syrian economy particularly after the price of an oil barrel increased to 200 USD when expectations were closer to 100 USD.
In addition to the above and taking into consideration that imported oil is already affected by the increase in global prices, questions are being asked to what extent will all this effect the cost of the product when dependency on imports of oil derivatives increases in addition to imports of raw materials?
According to the Syrian Ministry of Oil and Mineral Recourses, in 2008, Syria is expected to export 45 million barrels of oil equalling 6 million tons whereas projections of oil derivative imports are set at 8 million tons.
According to "Syrian Economic Indicators" in its first issue, Syria continues in its dependency on the production of crude oil whose price is increasing in the global market. The issue also provides figures on the total profit of oil excavations in 2004 at 225.3 billion SYP, in 2005 at 328.9 billion SYP and in 2006 at 386.2 billion SYP.
The approximate revenue of exported oil from Syria in 2008 with the price of a barrel set at 51 USD for light oil and 42 USD for heavy oil - taking into consideration the decline in Syria's crude oil production by 9 million barrels from 2007 – is 100 billion SYP, a drawback from 246 billion SYP in 2007.
What eases the effect of decreasing oil production in Syria is the increasing global oil prices. This is shown in the following table:
Year
Value of oil imports (million dollars)
Value of Oil Exports (million dollars)
2003
167
4.111
2004
972
3.880
2005
2100
4.361
Due to the support which is provided by the Syrian government in terms of the subsidies provided to stabilize the price of oil derivatives locally, the cost of produced goods haven't been directly affected by the global increases in prices to the extent that the global markets have been affected. However, prices of manufactured goods usually consisting of imported raw materials have been affected slightly and manufactured food products whose packaging and bottling consist of oil derivatives have been obviously affected by increasing global prices as well.
As for the price of fuel which most of the Syrian industries depend upon, the Syrian government has increased this price by 257% last April reaching 25 SYP per litre meaning that any other increase the government sets to the price of fuel will be followed by another increase in production costs and therefore an increase in the price of the final price. Adding to that, if the government frees energy prices, this would mean hysterical increases in consumer prices.
The same goes for agricultural products, whose production costs also includes the cost of irrigation through wells which work on fuel, the cost of transporting the goods from farms and plantations to the markets, bottling and packaging costs and fertilizer prices. The increase in oil derivatives also had a huge effect on the prices of agricultural goods leading to the establishment of an agricultural support fund.
The tourism sector saw the effects directly (transportation) and indirectly (food products and industrial goods and construction materials). Due to the increase in fuel last April, transportation costs increased by 125% before the tourism authorities protested. Hotel rates also increased by 28% in addition to a similar percentage in restaurant prices. Travel agents increased the prices of their prices by about 75%.
Important figures:
2.5 billion barrels: an assured figure of oil reserves in Syria
385 thousand barrels per day (bpd): the current amount of oil produced of which 150,000 is exported and the rest is refined in the Homs and Banias refineries
