Iran, Venezuela to Develop 140,000 Barrel-Per-Day Oil Refinery in Syria

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Researched by Industrial Info Resources (Sugar Land, Texas)--Venezuela and Iran have signed a memorandum of understanding to construct a 140,000-barrel-per-day (BBL/d) oil refinery at Furqlus near Homs, in the western region of Syria. Syria and Malaysia also will be part of this project.

Venezuela and Al-Bukhari Group (Kuala Lumpur, Malaysia) will hold stakes of 33% and 15%, respectively, while Iran and Syria each will hold a 26% stake in the project. Iran and Venezuela have established a joint venture company, Venezuela Iran Oil and Gas Company (VENIROGC) (Tehran, Iran), to oversee investments in this project. Syria will supply 50% of the crude feed to the refinery, while Venezuela and Iran will provide 30% and 20% crude, respectively, for the project.

Venezuela and Iran are building a close trade and political association. Recently, the countries signed three memoranda of understanding, including agreements to invest $760 million in each other's energy sector. Iran also signed a deal to import gasoline from Venezuela in the event of sanctions imposed by Western nations. Iran has agreed to acquire a 10% stake in the development of the Dokobuki oil field in Venezuela, while Petroleos de Venezuela S.A. (Caracas, Venezuela) will invest 10% in the Phase 12 development of the South Pars gas field in Iran. In July, Venezuela agreed to invest in the exploration of 12 blocks in Iran, which is partnering with Venezuela in the development of Block 7 of the Ayacucho oil field.

Venezuela and Iran established VENIROGC, a 50:50 joint venture formed by Petropars Limited (Tehran, Iran) and Corporacicentsn Venezolana del Petrcentsleo (Caracas, Venezuela), to undertake exploration and discovery of oil, and distribution of petroleum and oil products. The company focuses on markets in Central Asia, Central and South America, and Africa. As a policy, VENIROGC will not carry out construction, development or marketing activities in Iran and Venezuela. The company is also exploring the option of building storage facilities to store crude oil in Africa and China. The proposed 140,000-BBL/d refinery will be VENIROGC's first international venture.

Syria is located in Western Asia, sharing borders with Turkey, Jordan, Israel, Iraq, Lebanon and the Mediterranean Sea. The country, which is a middle-income economy, relies on oil, agriculture and tourism. Industry analysts have observed that Syria's weak financial sector, high rate of unemployment, growing population, and lack of infrastructure and industrial growth have become deterrents in its economic growth.

Since the 1960s, Syria has produced heavy crude oil from its northeastern fields. In the 1980s, low-sulfur, light-grade oil was discovered near Deir ez-Zor, which provided a boost to the country's oil production. According to the Statistical Review of World Energy 2009, published by BP plc (NYSE:BP) (London, England), Syria's proven oil reserves were about 2.5 billion barrels at the end of 2008. However, oil production slumped considerably, from about 600,000 BBL/d in 1992 to 398,000 BBL/d at the end of 2008, due to obsolete technology and infrastructure. Syria has two refineries located at Homs and Baniyas, with a combined refining capacity of 240,865 BBL/d.

The country, which has witnessed very little international investment recently, is opening its doors to international energy firms to develop its oil and gas sector. In a related development, China and Syria have signed an agreement to build a 100,000-BBL/d refining complex at Abu Khashab, northeast of Deir ez-Zor, with an investment of $1.5 billion. The refinery, which will process heavy Syrian crude, is expected to be completed by 2011.

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