Oil in commercial quantities was first discovered in the late 1950s. In 1986, production of 2.5 million tons a year of low-sulphur crude from a new field near Deir ez-Zor in eastern Syria began lessening Syrian dependence on external sources. Total production steadily increased to 14.5 million tons in 1988 and 31.7 million tons in 1995. By 1994, Syria was exporting 57% of its oil output. Oil output peaked at 604,000 barrels per day in 1996. At that point it started to decline as reserves began to become depleted, and also due to technological problems. By 2001, production had declined to 527,000 barrels per day. The proven reserves of Syria's five oil fields, all located in the northeastern part of the country, amounted to an estimated 2.5 billion barrels (400 million tons) of crude petroleum at the beginning of 2002. Oil output in recent years has reached a plateau, because older fields such as the Karatchuk (discovered in 1968) are reaching maturity. Production of oil is expected to steadily decline in upcoming years, and proven oil reserves are only expected to last until about 2010, while consumption increases as the population grows. As of 2000, however, it was estimated that only 36% of Syria's potential oil and gas deposits had been drilled.
Oil remains crucial to Syria's economy, accounting for about 60% of export earnings in 1999. A 663-km (412-mi) pipeline linking the oil fields, the coast at Tartus, and the refinery at Homs was completed in 1968. The pipeline, carrying Iraqi oil across Syria to Lebanon, was closed by Syria in April 1982, showing Syrian support for Iran in the Iraqi-Iranian war. Syria also refused to support Iraq during the 1991 Persian Gulf War, for which it was "rewarded" with billions of dollars in foreign aid. In 1998, Syria and Iraq signed an agreement to reopen the pipeline. In April, 2003, as part of the invasion of Iraq, American troops shut down the IPC pipeline. The cost to Syria of the shutdown was estimated at $500 million to $1 billion a year.
All oil concessions were granted exclusively in 1964 to the General Petroleum Authority, a government agency that owns the Homs refinery. In 1972, the pipelines and facilities in Syria of the Iraq Petroleum Co. were nationalized; the same year, Syria joined OAPEC. During the early 1980s, the government-owned Syrian Petroleum Co. and three Syrian subsidiaries of US oil companies—Marathon, Shell, and Coastal States—were engaged in further oil exploration. Oil exploration has slowed in recent years; only four of the 14 companies present in Syria in 1991 remained there in 1999.
Syria's natural gas production, however, has increased ten-fold since the mid-1980s. Proven natural gas reserves were officially estimated at about 200 billion cu m in early 2002. Production in 1999 totaled 6 billion cu m. Syria's current energy strategy relies heavily on the substitution of natural gas for oil in power generation in order to free up as much oil as possible for export.
Prior to 1983, as much as 70% of the production of electricity was hydroelectric, primarily from the Euphrates River plant. Thermal production, primarily oil-fueled plants, supplied 64.5% of electricity production in 2000, while hydropower accounted for 35.5%. Total electricity production in 2000 was 21.7 billion kWh. Consumption of electricity in 2000 was 17.7 billion kWh. Installed capacity in 2001 was 4,745,000 kW, up from 3,230,000 kW in 1988. The addition of electricity supply capacity has become a national priority; since 1993 several contracts have been awarded for new gas turbine power stations. These include the 600 MW al-Zara oil and gas plant completed in 2000.