Coming on what was expected to be the last day of the current round of talks, the second in three weeks, Friday's meetings are "a big test for whether this process will move forward or not," said a Western diplomat.
"We are in a dead-end, and I don't know if we will get out or not," the diplomat added, warning the prospects looked "grim".
The rival sides were meeting separately with UN mediator Lakhdar Brahimi Friday morning in a bid to break a deadlock which has seen them fail to even come together on an agenda.
"If (they) can't get an agreement on an agenda, I don't know how Brahimi will uphold a round three," said the diplomat, who asked not to be identified.
While the initial talks last month were viewed as a relative success for merely bringing the parties face-to-face, the current round has achieved little more since Monday than an endless restating of positions and trading of blame.
Washington, which backs the militant groups, and Moscow, which supports Damascus, sent top envoys to Geneva this week to use their clout with their allies to help revive the process.
But after a meeting with high-ranking US and Russian diplomats Thursday, Brahimi admitted that "failure is still staring us in the face".
The so-called Geneva II negotiations, which began on January 22, have so far done nothing to end the nearly three-year civil war that has claimed more than 136,000 lives and forced millions from their homes.
"We expected that the talks would be difficult. We didn't expect that (the parties) would be unable to compromise on an agenda, and that frankly is not good. That's a very bad omen for the process," said the Western diplomat.
The opposition National Coalition maintains that the only way forward is to create a transitional government that can guide Syria towards peace, without President Bashar al-Assad.
The government envoys says Assad's future is not up for discussion, and insists the priority must be halting "terrorism", which it blames squarely on its opponents and their foreign backers.
Brahimi has attempted to find a middle ground, suggesting the parties discuss the two issues in parallel.
NJF/NJF