British Company Concerned over its Oil ‘Rights’ in Northeastern Syria

A US armored vehicle drives past an oilfield in the countryside of al-Qahtaniyah town in Syria's northeastern Hasakeh province near the Turkish border, on Aug. 4, 2020. (AFP)
A US armored vehicle drives past an oilfield in the countryside of al-Qahtaniyah town in Syria's northeastern Hasakeh province near the Turkish border, on Aug. 4, 2020. (AFP)
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British Company Concerned over its Oil ‘Rights’ in Northeastern Syria

A US armored vehicle drives past an oilfield in the countryside of al-Qahtaniyah town in Syria's northeastern Hasakeh province near the Turkish border, on Aug. 4, 2020. (AFP)
A US armored vehicle drives past an oilfield in the countryside of al-Qahtaniyah town in Syria's northeastern Hasakeh province near the Turkish border, on Aug. 4, 2020. (AFP)

British company Gulfsands Petroleum has distanced itself from the partnership agreement between the United States’ Delta Crescent Energy company and the Kurdish autonomous administration east of the Euphrates River in northeastern Syria.

Officials from the firm told Asharq Al-Awsat that they will “defend the company’s rights” to invest in oil in Block 26, which is located east of the Euphrates and believed to produce 20,000 barrels of oil per day.

Gulfsands had signed a deal with the Syrian government in 2003 to invest and develop Block 26. According to the agreement, two-thirds of production will go to the government after calculating costs. Since 2011, the block came under the control of the Kurdish People’s Protection Units (YPG) and later the Syrian Democratic Forces (SDF) due to the ongoing Syrian conflict and the American and European sanctions against the Damascus regime.

Officials from Gulfsands told Asharq Al-Awsat that more than 26 million barrels of oil have been produced from Block 26 in four years. The production was unlicensed and it is unknown who received the oil or the extent of the damage that has been inflicted on the field.

Gulfsands has invested more than 350 million dollars in Block 26, which experts estimate is worth billions of dollars.

American investment
Prior to the eruption of the conflict in 2011, Syria used to produce some 360,000 barrels of oil per day. Production has since dropped to around 60,000. Some 90 percent of its oilfields and half of its gas fields are controlled by the SDF, which is backed by the US-led anti-ISIS coalition.

In Aril, Delta Crescent Energy struck a deal with the autonomous administration to obtained a license from the US Treasury to operate in northeastern Syria seeing as the war-torn country’s oil sector is under American and European sanctions.

Delta Crescent Energy was established in the US state of Delaware in February 2019. Its partners include former US ambassador to Denmark James Cain, James Reese, a former officer in the Army’s elite Delta Force, and John Dorrier Jr., a former executive at GulfSands Petroleum, reported Politico in August.

In July, Republican Senator Lindsey Graham, who is close to President Donald Trump, declared before Congress that SDF chief Mazloum Abdi had informed him of the signing of an oil investment agreement with an American company. US Secretary of State Mike Pompeo said the administration supports the deal and said it is intended to “modernize” the oilfields. “The deal took a little longer ... than we had hoped, and now we’re in implementation,” he said.

The deal was, however, widely criticized by Damascus, Moscow, Tehran and Ankara. They slammed it as “political recognition of the Kurdish administration” and violation of the Astana agreement reached between Russia, Iran and Turkey. Washington defended the deal, saying: “Syrian oil is for the Syrian people and we remain committed to the unity and territorial integrity of Syria. The United States government does not own, control, or manage the oil resources in Syria. The populations in areas liberated from ISIS make their own decisions on local governance.”

Protecting oil
“The goal is to get the production back up to where it was before the civil war and sanctions,” said Ambassador Cain according to Politico.

“I think this company’s going to improve the viability of the northern oil fields to make them more productive,” Graham said. “Conceptually it makes sense that we should, instead of just writing checks, help people help themselves.”

In October 2019, Graham played a role in persuading Trump to keep American forces deployed east of the Euphrates River after he had announced that he wanted to pull back the troop to the border with Turkey. Trump later confirmed that a small number of forces will remain in oil-rich areas, stressing that the US has “secured and protected” the oil. Indeed, some 500 soldiers remain east of the Euphrates and they have been supplied with better military gear to protect the oilfields.

Many questions have been asked about the role the American military and administration are playing in the new oil deal. Pentagon spokesperson Jessica McNulty noted that the Department of Defense “does not have an affiliation with any private companies in regard to the oilfields in northeast Syria.” However, she added that US forces in the region are “securing critical petroleum infrastructure in northeast Syria to deny ISIS access to critical resources and revenue,” reported Politico. McNulty also noted that the oil resources "currently provide some of the funding necessary for the SDF to conduct operations" against ISIS.

Sovereign rights
The deal between the American company and autonomous administration calls for the establishment of at least two makeshift oil refineries in the region east of the Euphrates that can produce 20,000 barrels of oil per day. The production will meet some of the local demand.

Other sources, however, weighed the possibility that the deal could allow operators to expand their work and invest in other oilfields. This would raise concerns among other oil companies, including Gulfsands.

Officials at the firm said they were “surprised” with the deal that was struck between Delta Crescent Energy and the Kurdish administration. One official said Gulfsands continues to investigate the details of the agreement and was determined to “protect” its rights. Moreover, he said that the firm was not involved in politics, but hopes that peace and stability will be restored in Syria.

Gulfsands remains committed to its project in Syria and is determined to protect its rights in line with international laws, he added. The company has signed a binding agreement with a sovereign state and it expects that its rights be recognized, hoping that it will resume its work when conditions permit it.

On the other end of the divide, Kurdish officials defended their deal with Washington, saying it had political undertones seeing as it was signed directly between an American company and the autonomous administration without having to obtain the Syrian government’s approval.

“The political significance of the deal is important and is tantamount of recognition” of the autonomous authority, he explained. Furthermore, it eases concerns that the US may suddenly pull out its troops from the region east of the Euphrates.



Iran Opts for Dialogue with Europe ahead of Trump's Return to Office

President Donald Trump shows a signed Presidential Memorandum after delivering a statement on the Iran nuclear deal from the Diplomatic Reception Room of the White House, Tuesday, May 8, 2018, in Washington. (AP)
President Donald Trump shows a signed Presidential Memorandum after delivering a statement on the Iran nuclear deal from the Diplomatic Reception Room of the White House, Tuesday, May 8, 2018, in Washington. (AP)
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Iran Opts for Dialogue with Europe ahead of Trump's Return to Office

President Donald Trump shows a signed Presidential Memorandum after delivering a statement on the Iran nuclear deal from the Diplomatic Reception Room of the White House, Tuesday, May 8, 2018, in Washington. (AP)
President Donald Trump shows a signed Presidential Memorandum after delivering a statement on the Iran nuclear deal from the Diplomatic Reception Room of the White House, Tuesday, May 8, 2018, in Washington. (AP)

It is difficult to predict what the outcomes will be of the discussions between Iran, France, Britain and Germany about Tehran’s nuclear program in Geneva on Friday.

Last week, the UN atomic watchdog's 35-nation Board of Governors passed a resolution again ordering Iran to urgently improve cooperation with the agency and requesting a "comprehensive" report aimed at pressuring Iran into fresh nuclear talks.

Britain, France, Germany and the United States, which proposed the resolution, dismissed as insufficient and insincere a last-minute Iranian move to cap its stock of uranium that is close to weapons-grade. Diplomats said Iran's move was conditional on scrapping the resolution.

Iran has been weighing its response to the censure, debating whether to increase uranium enrichment or by being open to the proposals expected at the Geneva talks.

The discussions may seek a new nuclear deal instead of the 2015 one with Tehran that is in tatters.

As it stands, Iran is likely to opt for negotiations instead of escalation due to a number of internal, regional and international reasons.

Diplomatic sources in Paris noted US President-elect Donald Trump’s appointments of officials handling Middle East affairs, underscoring their unreserved support to Israel and clear hostility to Iran.

These appointments may lead Iran to think twice before resorting to any escalation.

Even before Trump has taken office, his circles have said that the new president will take “several executive decisions related to Iran and that will be declared on his first day in office.” The decisions will be binding and do not need Congress’ approval.

However, Trump is unpredictable and the sources did not rule out the surprise possibility of him striking a deal with Iran related to its nuclear program and behavior in the Middle East. This means that Tehran will have to make major concessions, including abandoning its policy of “exporting the revolution”.

This remains a far-fatched possibility, however. In all likelihood, Washington under Trump will return to his “maximum pressure” policy against Iran on political, diplomatic and economic levels to make it return to the negotiations table and agree on a deal that completely ends its nuclear ambitions.

So, at the Geneva meeting on Friday, Tehran will seek to achieve two main goals: a nuclear breakthrough during what remains of US President Joe Biden’s time in office, and attempt to lure the European powers away from Trump.

The truth is that Tehran is wading in the unknown. One only has to go back to Trump’s past statements about how Israel should have struck Iran’s nuclear facilities during its October 26 attack on the country.

Trump has already shown Iran his hardline stance when he ordered the assassination of Quds Forces leader Qassem Soleimani near Baghdad airport in January 2020.

Based on this, Tehran is scrambling to avert a joint American-Israeli strike that Israeli Prime Minister Benjamin Netanyahu has been dreaming of.

Iran is vulnerable now due to two main reasons: the Israeli strike in October weakened Iran’s air defenses and Netanyahu has said that Israeli jets can now run rampant over Iran without any worries.

And Tehran can no longer rely on its allied militias to threaten Israel with all-out war. Hamas in Gaza is no longer in a position to threaten Israel and neither is Hezbollah in Lebanon.

So, Iran now finds itself exposed and would rather turn to negotiations with Europe than risk escalation that would cost it dearly with Israel now that it can no longer rely on Hamas and Hezbollah.