How to Use Syrian Oil as an 'Entry Point' to Breaking the Deadlock

In the face of the stability of the “borderlines” between the three Syrian zones of influence for two years, the continuation of the political stalemate and the emergence of a global energy crisis, a set of ideas is being circulated aimed at turning Syrian oil into a point of consensus between the players and an “entry point to break the deadlock”. This can be achieved through understandings that lead to an increase in oil production to about 500,000 barrels per day within three years to provide about 20 billion US dollars annually, distribute the revenues for the benefit of all Syrians, and support “early recovery” projects in accordance with the international resolution on humanitarian aid.

'Warlords'

After the eruption of the conflict in 2011, Western countries imposed sanctions on the Syrian oil sector, and foreign companies, which were producing about 400,000 barrels per day, left the country.

Currently, the Syrian Democratic Forces, with the support of the US-led coalition, control a quarter of Syria's area, but significantly 90 percent of the oil and more than half of the gas.

Syrian Oil Minister Bassam Tohme said a few days ago that the oil sector's losses since the beginning of the crisis amounted to $91.5 billion. He revealed that the direct losses to equipment in the oil sector amounted to 19.3 billion dollars, "of which 3 billion are the value of damages inflicted by the international coalition's strikes."

The indirect losses amounted to 72 billion dollars. The minister said the daily production of oil last year amounted to 89,000 barrels, the majority of which took place in Kurdish-controlled areas and is described by Tohme as “stolen”.

Since early 2017, the SDF has taken over oil fields east of the Euphrates River and their infrastructure owned by contracts with the government by foreign companies, including Gulfsands, Total, and Shell. Oil wells and facilities were also cordoned off. The Autonomous Administration of the SDF uses some of the production locally. Mediators and warlords transfer some of the oil to government areas to refine an amount and keep the other. Oil is also smuggled into Iraqi Kurdistan, for local consumption or for smuggling to Turkey. Oil is sold at very low prices, and wells are damaged

'Oil protection'

On October 6, 2019, Republican Senator Lindsey Graham played a role in persuading President Donald Trump to keep 900 members of the US military in eastern Syria, after his decision to withdraw from the border with Turkey. Trump later said that "a small number of soldiers will remain in the areas that contain oil," stressing that "we have ensured the security and protection of oil."

In July 2020, Graham, who is close to Trump, announced before Congress that SDF commander Mazloum Abdi informed him of the signing of an agreement with the American company Delta Crescent Energy to invest in oil after obtaining an exception from the Treasury Department (which was not extended by the administration of Joe Biden).

He added: "The American company will work to improve the feasibility of the oil fields to make them more productive. It makes sense that, rather than just writing checks, we should help people help themselves." Meanwhile, then Secretary of State Mike Pompeo said that "the agreement took more time than expected" and aims to "modernize oil."

The situation embarrassed the Syrian Ministry of Defense, which said that "Syrian oil belongs to the Syrian people, and we remain committed to the unity and territorial integrity of Syria." It added that "the United States government does not own, control, or manage the oil resources in Syria, and the population in areas liberated from ISIS make their own decisions regarding local governance."

After that, US Defense Secretary Mark Esper announced: "We are taking measures to strengthen our position in Deir Ezzor to prevent ISIS access to the oil fields." The Pentagon confirmed sending reinforcements and mechanisms to protect the oil fields, so that about 500 soldiers remained east of the Euphrates, with an increase in the number and quality of military equipment to provide protection for the oil wells.

'Quadruple rage'

The oil agreement, brokered by the US, was widely criticized by Damascus, Moscow, Tehran and Ankara as "political recognition of the Kurdish administration". They said it "contradicts the understanding of the guarantors of Astana, Russia, Iran and Turkey, to oppose any separatist agenda in Syria." Moscow considered it "a theft of Syrian wealth." It also angered foreign companies that hold sovereign rights in the oil fields.

Among those companies is Gulfsands, which had signed a contract with the Syrian government in 2003 to invest and develop Block 26 east of the Euphrates. According to its 2019 Annual Report, unauthorized production since early 2017 has been around 20,000 barrels a day, meaning that around 35 million barrels have been produced since then. Gulfsands expressed "concern" about this unlawful activity, and particularly the involvement of Delta Crescent Energy.

Profits...and ideas

According to experts' estimates, the Autonomous Administration receives 16 dollars per barrel, and 15 dollars goes to the Syrian government. The rest, which could amount to up to 50 dollars per barrel, is "lost" and ends up in the hands of war profiteers.

It is again reported in the Gulfsands Annual Report that Block 26 could, with appropriate investment, be increased in production from 20,000 to 100,000 barrels per day. If this could be replicated across the region, it could mean an industry that produces 500,000 barrels per day which at todays' high oil prices could raise round 18 billion dollars of gross revenue per year.

Challenges

Rebuilding the Syrian oil industry this way faces many obstacles. It would need agreement between the Autonomous Administration of North and East Syria and Damascus and also require international support. In particular, this project requires political understandings between the US, which imposes sanctions on the oil sector, and Russia, which accuses Washington of "stealing oil."

Some experts suggest the establishment of a structure that falls within the context of UN envoy Geir Pedersen's proposal for "step-for-step" measures, to include aspects of financing "early recovery" projects under the new Security Council resolution for humanitarian aid drafted by Washington and Moscow, and providing new sources of relief funding from Syria. Significantly, the European Union had in the past 11 years allocated 25 billion euros to Syrians, 14 billion dollars from America, and 3.7 billion pounds from Britain. A fully functioning and revitalized oil industry could exceed these contributions.

The proposal suggests a formal structure of specially selected and audited service providers, such as. returning foreign oil companies, preferred oil traders, and financiers who, in exchange for sanctions exemptions and approvals, would ensure full transparency and accountability for the exploration, development, production, marketing and sale of oil and gas through established international channels.

There is no doubt that such an initiative is ambitious and would need to navigate international sanctions, as well as provide transparency and benefits for all participants to them to have confidence in its implementation and provide their support. However, the prize is huge, particularly for the Syrian people, and surely is worth attention and consideration from all sides.

Iran and the United States will hold talks Saturday in Rome, their second round of negotiations over Tehran´s rapidly advancing nuclear program.

The talks follow a first round held in Muscat, Oman, where the two sides spoke face to face.

Trump has imposed new sanctions on Iran as part of his "maximum pressure" campaign targeting the country. He has repeatedly suggested military action against Iran remained a possibility, while emphasizing he still believed a new deal could be reached by writing a letter to Iran´s 85-year-old Supreme Leader Ali Khamenei to jump start these talks.
Khamenei has warned Iran would respond to any attack with an attack of its own.

Here´s what to know about the letter, Iran´s nuclear program and the tensions that have stalked relations between Tehran and Washington since the 1979 Iranian Revolution.

Trump dispatched the letter to Khamenei on March 5, then gave a television interview the next day in which he acknowledged sending it. He said: "I´ve written them a letter saying, `I hope you´re going to negotiate because if we have to go in militarily, it´s going to be a terrible thing.´"
Since returning to the White House, the president has been pushing for talks while ratcheting up sanctions and suggesting a military strike by Israel or the US could target Iranian nuclear sites.

A previous letter from Trump during his first term drew an angry retort from the supreme leader.

But Trump´s letters to North Korean leader Kim Jong Un in his first term led to face-to-face meetings, though no deals to limit Pyongyang´s atomic bombs and a missile program capable of reaching the continental US.

Oman, a sultanate on the eastern edge of the Arabian Peninsula, hosted the first round of talks between Iranian Foreign Minister Abbas Araghchi and US Mideast envoy Steve Witkoff last weekend. The two men met face to face after indirect talks and immediately agreed to this second round.

Witkoff later made a television appearance in which he suggested 3.67% enrichment for Iran could be something the countries could agree on. But that´s exactly the terms set by the 2015 nuclear deal struck under US President Barack Obama, from which Trump unilaterally withdrew America.

Witkoff hours later issued a statement underlining something: "A deal with Iran will only be completed if it is a Trump deal." Araghchi and Iranian officials have latched onto Witkoff´s comments in recent days as a sign that America was sending it mixed signals about the negotiations.

Iran has insisted for decades that its nuclear program is peaceful. However, its officials increasingly threaten to pursue a nuclear weapon. Iran now enriches uranium to near weapons-grade levels of 60%, the only country in the world without a nuclear weapons program to do so.

Under the original 2015 nuclear deal, Iran was allowed to enrich uranium up to 3.67% purity and to maintain a uranium stockpile of 300 kilograms (661 pounds). The last report by the International Atomic Energy Agency on Iran´s program put its stockpile at 8,294.4 kilograms (18,286 pounds) as it enriches a fraction of it to 60% purity.

US intelligence agencies assess that Iran has yet to begin a weapons program, but has "undertaken activities that better position it to produce a nuclear device, if it chooses to do so."

Ali Larijani, an adviser to Iran´s supreme leader, has warned in a televised interview that his country has the capability to build nuclear weapons, but it is not pursuing it and has no problem with the International Atomic Energy Agency´s inspections. However, he said if the US or Israel were to attack Iran over the issue, the country would have no choice but to move toward nuclear weapon development.

"If you make a mistake regarding Iran´s nuclear issue, you will force Iran to take that path, because it must defend itself," he said.

Iran was once one of the US´s top allies in the Mideast under Shah Mohammad Reza Pahlavi, who purchased American military weapons and allowed CIA technicians to run secret listening posts monitoring the neighboring Soviet Union. The CIA had fomented a 1953 coup that cemented the shah´s rule.

But in January 1979, the shah, fatally ill with cancer, fled Iran as mass demonstrations swelled against his rule. The Iranian Revolution followed, led by Grand Ruhollah Khomeini, and created Iran´s theocratic government.

Later that year, university students overran the US Embassy in Tehran, seeking the shah´s extradition and sparking the 444-day hostage crisis that saw diplomatic relations between Iran and the US severed. The Iran-Iraq war of the 1980s saw the US back Saddam Hussein. The "Tanker War" during that conflict saw the US launch a one-day assault that crippled Iran at sea, while the US later shot down an Iranian commercial airliner that the American military said it mistook for a warplane.

Iran and the US have see-sawed between enmity and grudging diplomacy in the years since, with relations peaking when Tehran made the 2015 nuclear deal with world powers. But Trump unilaterally withdrew America from the accord, sparking tensions in the Mideast that persist today.

How to Use Syrian Oil as an 'Entry Point' to Breaking the Deadlock