This article is part of the August 2026 edition of the Syria Monthly Economic Digest. Click here to explore the full edition.
Key Developments: On August 4, the Syrian Petroleum Company (SPC) announced it had assumed control of all oil fields in the Northeast, with SPC Director Youssef Qiblawi saying rehabilitation would begin immediately and take six months to a year. Qiblawi said the fields were producing more than 100,000 barrels of oil per day (bopd), with output expected to exceed 250,000 bopd by 2027. The handover implements the third clause of the January integration agreement between Damascus and the SDF, according to Qiblawi, which stipulated that the government take control of all border crossings and oil and gas fields in the region. Reporting in late August indicated that the transfer of all remaining fields and wells in Hasakah would be completed on September 10, following Mazloum Abdi’s August 25, 2026 announcement of the SDF’s dissolution.
The handover was accompanied by HKN Energy’s entry into Rmeilan, Syria’s largest field complex, which holds more than 1,300 wells and produced between 180,000 and 200,000 bopd before 2011, roughly half of national output, according to Qiblawi. It was reported that the state’s share of the project would be 70% versus 30% for the American company, and that Hasakah governorate would receive a share of revenues. Other reporting on the same agreement described a 25-year term with a phased revenue split, giving the government 60% during the first five years, 65% in a second phase, and 70% for the remainder of the contract. The agreement also includes salary increases for field employees and expanded environmental services for residents of the governorate.
More broadly, the Ministry of Energy reported that in H1 2026 it signed seven memoranda of understanding and three development contracts, completed 3,460 meters of drilling, repaired 21 wells, brought 152 wells into operation, and brought 10 new wells into service. It also reported rehabilitating five kilometers of the Conoco gas line and restarting the main pumping unit in Homs after a twelve-year stoppage.
In parallel, the SPC announced the complete removal of primitive refineries, known as harraqat (حراقات), from Deir Ezzor governorate. SPC Executive Support Director Majed Habib subsequently detailed the scale of the campaign: more than 1,660 units dismantled by company teams across Deir Ezzor and Hasakah, including over 1,200 in the al-Omar sector, around 400 in the Dijla sector and along the Jabsah line, and around 60 in the Shaddadi sector, with owners removing a further 300 themselves, bringing the total to approximately 2,000. Habib said individual units ranged from around 10 to around 400 barrels of capacity, that the file was complete in Deir Ezzor but ongoing in Raqqa, Hasakah, and rural Aleppo, and that the company had absorbed some former operators into formal employment, assisted owners in relocating equipment, and compensated eligible cases under an approved mechanism.
Against these consolidation measures, the Central Authority for Control and Inspection (CACI) disclosed findings of an investigation spanning May to August 2026 into a fraud at Deir Ezzor’s oil fields amounting to USD 28 million. The Authority reported preliminary damages of more than USD 8 million from contracting, maintenance work, and mismanagement, plus a further USD 20 million in price differentials on crude transport contracts between the Central Region administration and haulage companies. Following the three months of monitoring involving 22 inspectors, the Authority suspended nine officials and referred them to the judiciary, among them the director of Deir Ezzor fields, the director of oil transport and distribution for the Central Region, the transport supervisor, and several production and well-services officials at the al-Omar, al-Teim, and al-Tanak fields. It also directed the termination of contracts with non-compliant contractors and recommended precautionary seizure of the assets of those implicated. The specific findings included the absence of genuine tanker sealing at field loading yards, with loads estimated arbitrarily; maintenance contracts held for months by technically unqualified companies without objection from any technical or administrative committee; and producing wells left shut in without any party reporting or restarting them.
Separate investigations into six contracts dating from the Assad era concluded for the Baniyas refinery company between 2021 and 2024 identified violations worth old SYP 3.396 billion, of which old SYP 1.1378 billion consisted of price differentials granted to a contractor because of rising industrial diesel prices. Energy Minister Mohammad al-Bashir directed that oversight work continue until completion with results disclosed progressively, and said further files remained under review.
Ministry of Energy data for the first half of 2026 put crude production at 14.8 million barrels, refined products at 3.5 million tons, raw natural gas at 1.42 billion cubic meters, and clean gas at 1.25 billion cubic meters. Over the same period, the ministry recorded imports of 1.5 million tons of crude, 1.01 billion cubic meters of gas, 598,000 tons of diesel, 283,000 tons of petrol, 196,000 tons of LPG, and 32,000 tons of fuel oil, alongside 110 tankers received at oil terminals.
Against this backdrop, queues nevertheless returned to filling stations in Damascus and its countryside from August 11, which SADCOP attributed to an emergency technical fault in the petrol transfer pump on the Baniyas–Homs line, saying it activated an alternative supply plan by road tanker and discharged around 73,000 cubic meters of petroleum products over two days. Minister of Energy Mohammad Al-Bashir formed an inspection committee to determine why petrol was scarce in the capital despite being available in depots, requiring it to report within 48 hours. SPC Media Director Mohammad Nour al-Ahdab subsequently attributed the crisis to a halt in petrol production at the Homs refinery, the concentration of loading operations at the Baniyas depot, and higher demand, acknowledging that the supply system was operating with a limited safety margin and that reserve stocks required strengthening. He later denied reports of widespread substandard petrol at official stations, attributing quality complaints to mixing and to smuggled material circulating outside formal distribution channels.
Further highlighting the hydrocarbons sector’s fragility, on August 18, an explosion struck the main export pipeline from the Jabsah gas plant in Hasakah at around 4 AM, halting gas flow and disrupting supply to several power generation turbines; SPC said preliminary investigations pointed to deliberate sabotage and announced additional security measures around oil and gas facilities and transmission lines. The same day, three workers were killed by a hydrogen tank explosion during component replacement at the Baniyas thermal power plant.
Why It Matters: August’s shortage echoes those reported in July, albeit for different reasons, and remains substantively different. Yet the result is the same, and public discontent is stark across the country. While July’s queues followed a pricing decision taken without a mechanism to compensate stations holding higher-cost inventory and thus represented a coordination failure, August’s followed a mechanical fault and a refinery outage and were a redundancy failure. The SPC’s own characterization of a limited safety margin is the more useful admission: with the Baniyas refinery under rehabilitation, loading concentrated at a single depot, and reserve stocks acknowledged as insufficient, the system has no absorptive capacity. The Jabsah sabotage makes the same point on the gas side, where a single line failure propagated directly into power generation. Investment announcements are accumulating faster than the buffers that would make the existing system tolerable to live with.
The harraqat file closes a thread this digest has followed since May. The state’s case was always sound on environmental, fiscal, and safety grounds, and removing roughly 2,000 units is a genuine administrative achievement in itself. But the distributive question remains open in the same form. SPC has described absorption into formal employment, equipment relocation, and compensation for eligible cases, without publishing the number of workers absorbed, the terms offered, or the value disbursed, which represent precisely the gaps that workers identified in Aleppo and Deir Ezzor earlier in the year. In parallel, the unresolved case of the dismissed Furat Petroleum employees, who appealed to the Energy Minister in early August after interviews held in May produced no decision, suggests that the Ministry’s capacity to absorb additional staff might be limited, or at least slower than its capacity to remove, close down, and dismiss. Given the many grievances piling up in Northeast Syria, this Ministry too will have to be careful about sequencing: informal refining is being eliminated in the same governorates where the population seems to be struggling the most and where the government cannot afford to be contested.
Still, as the integration process seems to be moving forward with few struggles, at the political level at least, Damascus managed to consolidate the oil sector on four fronts. The remaining fields outside government control were transferred to SPC, while the terms for operating the largest of them over the next 25 years were agreed. In Deir Ezzor, the parallel refining economy ended, and the state began prosecuting officials within its own oil bureaucracy. Taken together, these moves mark a significant shift in how the sector is controlled, addressing gaps that have remained since 2012. They also leave Damascus with fewer intermediaries to point to when problems arise. From September, more of the responsibility for what the sector produces, collects, and ultimately delivers to petrol stations in Damascus will rest directly with the state.
Finally, the corruption findings may appear less consequential than they are, as they raise questions about the state’s ability to manage its new oil contracts. The CACI identified failures in the basic functions that determine whether a revenue-sharing agreement can actually be enforced: metering, calibration, tanker sealing, load verification, contractor qualification, and monitoring of well productivity. A state that cannot verify how much crude leaves a loading yard cannot verify the basis on which its 60% or 70% share is calculated.
This is the practical side of the argument made in previous editions that contract design matter more than the identity of the investor. But, given this latest development, the question is no longer just how the contracts are designed; it is whether the state has the administrative capacity to enforce them. The sequencing is therefore unfavorable: the contracts were signed first, and these control weaknesses were documented afterward. That an external body uncovered the violations during a single field visit, rather than SPC’s own internal controls, should concern both counterparties and the Ministry of Finance—particularly given that oil and gas revenues only began flowing to the Treasury in May.
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