What Now for Syrian Oil – asadkhone

Syria’s new government, Hayat Tahrir Al Sham, cut a deal with the Kurdish militias, leading analysts to believe that there is a chance here to patch the fragmentation and competition for resources that has plagued the nation and led to conflict. The northeast is controlled by the Kurdish-led SDF (Syrian Democratic Forces), backed by the U.S. (on and off, when it suited Washington). So far, according to Arab sources, since Sunday about 5,000 barrels per day is making its way from the Kurds to Damascus. This small amount of desperately needed oil will feed two refineries, with officials also expecting…

But the industry is in shambles after 14 years of war, neglect and sanctions, and ramping up production and refining will be a monumental task, and in the meantime, Damascus is looking for new import tenders with local intermediaries to cover supply.

The EU has suspended a handful of sanctions against Syria, including those related to energy, banking and reconstruction, and the oil is now flowing again from Kurdish-controlled regions in the northeast. Last weekend, Kurdish-led authorities started shipping oil from fields they control in the northeast to the new central government in Damascus, marking a fairly significant move towards reconciliation, and potentially, stability post-Assad. At the same time, earlier this week, Syria’s new oil minister called on foreign oil companies to return to operations now that sanctions have been eased.

At its height in 2013, Syria was home to an estimated 2.5 billion barrels of oil, most of it in the country’s east, along the border with Iraq, and small quantities in the central region. For more context, Syria was producing less than 400,000 bpd in 2010. Since 2014, it’s produced barely anything, and Damascus has been starved of domestic oil and gas, which has largely been the stuff of the black market since the civil war. Arab media puts current output at around 50,000 bpd.

It had been flowing to the Assad regime before, intermittently. Enemies need to make money off of each other, too, despite their civil war status.

With respect to the newly flowing 5,000 bpd of oil, it’s not the quantity that is important here, rather its origins and destination, and the implications of that going forward. The deal in place is only for three months, which is the Kurds’ way of testing the will of a new Damascus to make peace with the Kurds, who not only control nearly all the country’s oil, but also its largest hydroelectric dam (desperately in need of repair).

But Syria does not exist in a vacuum, and external actors will have plenty to say.

Turkey, for one, won’t like it, because it is attempting to rout the Kurds in Syria, and has criticized such oil deals in the past, accusing the U.S. of stealing Syrian oil through dubious deals with the Kurds. (In 2020, Turkish media reported about a secret deal between a U.S. oil company, Delta Crescent Energy, and the SDF). Turkey has also backed Russia’s accusations that Washington was attempting to hijack Syria’s oil by turning the northeast into a “quasi-state”.

The Kurds’ 3-month trial oil deal reflects less what they think the new Syrian government will do, and more what they fear Turkey might do to meddle. Most of the meddling right now will be left up to Turkey, with Russia having largely abandoned Syria and shifted focus to Libya and Sudan, and with Iran sitting quietly on the sidelines while Israel continues its encroachment.

We will be closely watching developments, including an enigmatic one revolving around two disparate Kurdish groups, the SDF and the PKK (Kurdistan Workers’ Party), Turkey’s biggest nemesis. This week, PKK leader Ocalan (from a Turkish prison) called on all Kurdish groups to lay down their arms and dissolve the PKK. The SDF rejected the call, which would have been a major victory for Erdogan.