The Legal Status of the Oil Contracts in Syria

As discussed in our previous issue, Syria’s oil sector once played a critical role in the country’s economy and could be key to its recovery, particularly as the Syrian Democratic Forces-controlled areas, which account for over 85% of oil production, are reintegrated. The legislative framework governing the oil and gas sector consists of 14 laws and decrees, with the latest amendment dating back to 2009. Since then, the state-owned General Petroleum Corporation (GPC) has overseen supervision, exploration, development, and production.

As shown in the figure below, by 2011 the GPC operated through subsidiaries or Joint Operating Companies under Production Sharing Agreements (PSAs) with eleven international companies. However, some oil fields remained under the exclusive control of the GPC and were therefore fully owned by the government. A table detailing the PSAs in place in 2011 is provided at the end of the article.

As shown in the figure below, by 2011 the GPC operated through subsidiaries or Joint Operating Companies under Production Sharing Agreements (PSAs) with eleven international companies. However, some oil fields remained under the exclusive control of the GPC and were therefore fully owned by the government. A table detailing the PSAs in place in 2011 is provided at the end of the article.

Following the imposition of sanctions by the EU, US, UK, and Canada starting in April 2011, international companies ceased operations, citing force majeure due to sanctions and security concerns. This led to the suspension of the contracts and raised questions about their legal fate. The situation grew more complicated after the overthrow of the Assad regime in December 2024, leading to a period of legal uncertainty regarding contracts signed by the former government, particularly those in the oil sector.

While some companies remained silent throughout the conflict, others expressed their eagerness to resume operations once permitted. The key legal issue now is whether these companies can resume their contracts and whether they can claim rights over production in their blocks currently underway—operations that some, including Gulfsands, have described as “unlawful.”

Further complicating the legal landscape are contracts signed by the former regime with Russia and Iran during the conflict. The Caretaker Government (CG) can now argue that these contracts were obtained under duress, with some asserting that the terms are extremely unfavorable to Syria.

Table 2: Oil Contracts Signed After 2011

Source: Official documents and media articles.

The contracts in question are not publicly available, making it unclear whether force majeure and its consequences were pre-defined at the time of signing. However, the experiences of companies forced to stop operations due to force majeure or sanctions disruptions vary widely. In some cases, rulings such as the UK Supreme Court’s decision in RTI Ltd v MUR Shipping BV have reinforced a strict interpretation of force majeure, affirming that contracts must be upheld as written, without retroactive extensions. But cases in Venezuela, Russia, and Libya suggest that force majeure declarations and sanctions-related disruptions can result in amending preexisting contracts under certain political conditions. 

In January 2019, the US stringently sanctioned Venezuela’s oil sector; the US company Chevron halted its operations before resuming production in November 2022 after the issuance of a license from OFAC. In July 2022, the Russian company Gazprom also declared force majeure on gas supplies to Europe through Nord Stream 1 before resuming supply and trying to compensate for the shortage through TurkStream. In Libya, the government declared force majeure on certain oil fields, but lifted the declaration once conditions improved.

Unlike these cases, Syria faces the added challenge of a regime collapse, creating yet more uncertainty over whether contracts will be honored, renegotiated, or invalidated. A new government emerging from a revolution or coup is generally expected to honor its predecessor’s international obligations, though exceptions exist. Some may argue that Syria falls under the Vienna Convention on the Succession of States in Respect of Treaties (1978), which states that obligations do not automatically transfer. However, the experiences of other countries suggest there is no one-size-fits-all procedure, with political factors, sanctions lifting, and the nature of the contract itself often playing a significant role. 

Legal uncertainty persists, particularly concerning ‘odious debt’—illegitimate sovereign debt incurred without public benefit or consent. By extension, some contracts—especially those signed after 2011—could also be deemed ‘odious’ and subject to cancellation by the new administration in Damascus. For example, the CG reportedly cancelled the 2019 Tartous port management contract signed with a Russian contractor during the Assad-era government. 

Restoring Syria’s oil potential is crucial for economic recovery. Reducing reliance on costly imports and eventually resuming exports could generate much-needed revenue. To attract investment, the new authorities must adopt a transparent and pragmatic approach, balancing contractual obligations, accountability, political considerations, and economic priorities. Settling matters with former oil companies will reassure investors and signal Syria’s post-conflict economic direction. How these contracts are handled will be a key indicator of broader economic policy, shaping investor confidence and influencing the return of international companies to critical sectors like electricity and infrastructure.

Appendix: Production Sharing Agreements (PSAs)  in Syria as of 2011

Source: Annual reports, media articles, research papers, and author’s calculations.