Fri 13 Dec 2019

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A convoluted system for Syria’s oil revenues

People extinguishing fire near an oil well in an agricultural field, al-Qahtaniyah town in al-Hasakah Governorate- June 10, 2019 (AFP)

People extinguishing fire near an oil well in an agricultural field, al-Qahtaniyah town in al-Hasakah Governorate- June 10, 2019 (AFP)

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Enab Baladi – Mohamed Homs

The Syrian Democratic Forces (SDF) have been confused by the decision of its American ally to withdraw from Syria, as its mission to fight and eradicate ISIS’ presence in the region came to an end. Nonetheless, the US announced shortly after its troops’ return to Syria in order to protect oil fields. This did not bring drastic changes to the Syrian oil sector but simply transferred the management of oil resources in the country to Washington. Thus, the US administration stated that the Syrian oil revenues will be allocated to support the SDF.

Despite the US administration’s public adherence to managing oil resources in Syria, it is difficult to determine its distribution plan, notably as the Syrian regime-controlled areas are in urgent need of petroleum, at a time when Washington has imposed a siege on al-Assad’s government with sanctions. Thus, the regime may become the most prominent customer of the Syrian oil, and one of the indirect supporters of the SDF, despite the fact that al-Assad considers the Kurdish faction as an “enemy,” in one way or another due to the SDF’s promotion of a “separatist project,” according to the regime’s official narrative.

Controlling the oil fields is considered by the US as one of its biggest gains in the war against ISIS, which was confirmed by Donald Trump on October 27, attributing the US protection of Syrian oil to three reasons: “First, because ISIS was using it; second, as it could be directed to benefit the Kurds; and third, because we will also have a share. We might entrust ExxonMobil Corporation or any other American company to go to the oil fields and prospect there.”

US influence

The US has officially decided to take charge of the Syrian oil; following Trump’s statements about the US troops’ redeployment in the area in order to protect oil wells, on October 27.

However, the situation of the parties to the conflict in Syria remains unchanged, as the Syrian oil fields were successively controlled by ISIS, the SDF, then the US forces.

The Syrian regime has lost control of about 80 percent of Syrian oil wells, which are currently under the control of Washington. While the Americans insist on staying, they can develop the production of these fields and facilitate oil exports.

In an interview with Enab Baladi, an expert in the field of oil and mineral wealth and former Assistant Minister of Oil in the Syrian Interim Government, Abdul Qader al-Alaf, insisted that Americans are able to develop oil production and reach the quantities produced at the beginning of the Syrian revolution in 2011, especially the eastern region oil fields, in al-Hasakah and Rumaila, which were not damaged; in addition to the fields of Deir ez-Zor and the fields situated between the governorates of Raqqa and Deir ez-Zor, which can resume production activities after maintenance.

Al-Alaf suggested that oil production in fields outside the Syrian regime’s control would reach 400,000 barrels. Such amount would fund the SDF and finance part of US operations in Syria.

As for the distribution of Syrian oil output, al-Alaf indicated that a quota of the oil used to be directed to the local markets in the “liberated” areas (controlled by the opposition), and another quota was bought by the Syrian regime through its agents.

He added that the US is able to market more oil thanks to its gas companies’ connections, and even if Turkish and Syrian forces close the Turkish border in its face, Americans will head towards Syria’s border with the Iraqi Kurdistan.

“Exporting oil is not a stumbling block, as long as Americans are there, since they are able to run companies and increase production,” he added.

Syrian regime supports SDF

It is difficult to determine the oil quantities bought by the regime from fields controlled by the SDF in north-eastern Syria; however, the Syrian Network for Human Rights (SNHR) stated in a report on September 19 that the oil fields under the control of SDF produce approximately 14,000 barrels per day.

According to testimonies obtained by the SNHR, the SDF sells the barrel of crude oil to the Syrian regime for about $ 30, with daily revenues estimated at $ 420.000, gaining $ 12.6 million per month and $ 378 million per year, without counting the Gas revenues.

According to the report, there are indications suggesting ongoing coordination between the SDF and the Syrian regime since mid-2012, when the Syrian regime withdrew from al-Hasakah Governorate. Thus, oil transactions between both parties have began since the end of 2017, when the SDF tightened its control over oil and gas wells in Deir ez-Zor.

Supply operations are taking place in the Rumaila and As-Suwayda fields, al-Hasakah Governorate, since production has not ceased in those two fields since mid-2012.

Due to the shifts, which took place on the ground, and following Donald Trump’s recent decision to keep US troops in the Syrian territory, in order to protect oil wells and allocating part of Syrian oil revenues to support the SDF, the Syrian regime and its Russian ally started attacking the US.

Moscow accused the US of smuggling oil worth more than $ 30 million every month from Syria. Russian Foreign Ministry spokeswoman, Maria Zakharova, indicated that Washington does not intend to leave the oil fields in the near future, reported TASS News Agency.

For his part, al-Alaf thinks that the figure mentioned by Russia makes sense and may be even larger; pointing out that the Syrian regime is funding the SDF, one way or another, despite its recent claims, which al-Alaf considered as “propaganda.” He also re-asserted that al-Assad government buys oil from the SDF and contributes to financing the Kurdish faction through traders and brokers, including the Katerji family’s companies, in the same way it used to exchange with ISIS via George Hasswani.

How US controls oil?

With the launch of Operation Peace Spring by Turkey on October 9, and the repositioning of US troops in the oil fields in the eastern region, the prices of fuel imported to the Governorate of Idlib, north-western Syria, began to rise in a limited way.

The price of a liter of diesel fuel, coming from the eastern regions of Syria, reached 365 Syrian Pounds, recording an increase of 80 Syrian Pounds, according to the WED Company bulletin of 14 November. This increase can be attributed to the factors of fuel transportation routes, oil import and availability at the gas stations; while the price of diesel and gasoline imported from Turkey recorded an increase which did not exceed 25 Syrian pounds.

Al-Alaf asserted that the influence of US control over oil fields in north-eastern Syria is still intangible, pointing out that the US-Turkish relations and understandings govern the oil trade between these areas, which may affect the opening or closing of roads.

He added that the fuel market in the north-west will not be greatly affected, despite the change of influence and control over the oil wells, because these areas have not been making any significant profits from oil. The only difference that may be recorded is the import operations through brokers and traders, in addition to opening and closing transport routes.

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