Can Syria's Kurds reel in Turkey with profits from American oil deal?

As further details emerge about the deal struck between an obscure American oil company and the Kurdish-led autonomous administration of northeast Syria, it is increasingly clear that the accord is as much about political brinkmanship as oil. Mazlum Kobane, the commander in chief of the US-backed Syrian Democratic Forces (SDF), is the brains behind it. In sealing the 25-year-long accord with Delta Crescent Energy, Kobane hopes to achieve a set of ambitious and interlinking goals.

The first is to cement the US military presence in northeast Syria by bringing in a US oil company, an idea that has been floating around for some time. It’s no accident that when President Donald Trump said he was keeping US forces in northeast Syria in the wake of Turkey’s October incursion, it was “for the oil.” The idea had been planted in the president’s brain too. Starving the Bashar al-Assad regime of oil revenues serves Washington’s overall strategy of pressuring the Syrian strongman into ending his alliance with Iran. Just as importantly, oil revenues also keep the Syrian Kurds financially solvent, obviating the need for American largesse.

In Kurdish minds, the injection of US business will, over time, lead to deeper political engagement between the US government and Syrian Kurds. The longer the Americans stay, and the more the relationship diversifies away from a narrow, security-focused one, the greater the chances that the Syrian Kurds will acquire a semi-independent status akin to that of the Kurdistan Regional Government (KRG) in northern Iraq, which evolved under US military protection. But the KRG was unlikely to have survived economically without Turkey. Therein lies the other main pillar of Kobane’s strategy — one that chimes with Washington’s desire to repair relations with its NATO ally.

Oil played a critical role in getting Turkish President Recep Tayyip Erdogan to formalize ties with the KRG in 2010. That is when Turkey opened a consulate in Erbil and went on to build a pipeline to export Iraqi Kurdish crude via export terminals on its southern Mediterranean coast in defiance of the central government in Baghdad.

The Iraqi Kurds were shrewd enough to give a big chunk of the contracts in the early days of the oil-fueled construction boom to Turkish companies with strong links to far-right nationalists. At the same time, they facilitated peace talks between Turkey’s national intelligence agency (MIT) and Abdullah Ocalan, the imprisoned leader of the Kurdistan Workers Party (PKK), to bring an end to his nearly four-decadeslong armed insurgency against the Turkish state.

Can the same scenario be repeated between Turkey and the Syrian Kurds? Can giving Ankara a cut in the oil revenues by routing exports through Turkey melt its resistance to the SDF, in turn making the US military presence easier to sustain? Kobane is betting that it can. It’s a long shot. But the arc of history suggests that time is working in the Kurds' favor, except when they miscalculate and overreach. When the Iraqi Kurds held their independence referendum in 2017 in the face of stiff resistance from Washington, Ankara, Tehran and Baghdad, they lost their “Jerusalem” of Kirkuk. When the Syrian Kurds made a play to extend their control west of the Euphrates River in 2016, Turkey launched its first invasion to torpedo their plans. 

Has Kobane overreached with the oil deal?

Turkey’s internal political dynamics are undoubtedly a big problem. With his poll numbers slipping, Erdogan is ever more dependent on the support of the nationalists who view any Kurdish rights as an existential threat, or so they claim to keep their base intact. Erdogan pulled the plug on the peace talks in 2015 in part because they were robbing him of nationalist votes.

Turkey has been launching massive operations targeting the Kurds in northern Syria, most recently in October when it occupied a slice of northeast Syria after US troops pulled away from the border. It placed a bounty on Kobane’s head and continues to target his associates inside Syria, killing three women from his village in Kobani in a drone strike in July.

Turkey justifies its actions on the grounds that Kobane and many of his Syrian Kurdish comrades are members of the PKK. This was certainly true until 2011 when Syria’s civil conflict erupted. But it’s impossible to prove that they still report to the Qandil Mountains in Iraqi Kurdistan where the top PKK commanders are based.

Egged on by the State Department, Kobane has been determinedly trying to downplay his PKK credentials, which have allowed Turkey to freeze the autonomous administration out of now-stalled UN-sponsored peace talks in Geneva between the Syrian opposition and Assad’s people.

The PKK is on the European Union's and the State Department’s list of terrorist organizations.

Kobane has also been cultivating Nechirvan Barzani, the president of Iraq's Kurdistan Region. Barzani clinched the oil deal with Turkey as prime minister in 2013, gets on well with Erdogan and is said to be involved in the Delta Crescent deal. It remains unclear, however, where Masrour Barzani, his cousin and brother-in-law who replaced him as prime minister, stands on the matter. His views are key. 

Following Turkey’s Operation Peace Spring, Kobane made a fresh play. He decided not to put up any resistance against the Turks and their Sunni rebel proxies, deploying his acumen in the diplomatic arena instead. Kobane initiated reconciliation talks with Syrian Kurdish opposition parties gathered under the umbrella of the Kurdistan National Council (KNC). The KNC is closely allied with the KRG and is part of the Istanbul-based Syrian opposition.

The aim is to bring the KNC into the autonomous administration and fold its small group of Iraq-based fighters into the SDF. This would give the SDF and its allies more local buy-in and kill Turkey’s claims, or so it’s hoped, that they are PKK puppets. Unity would also bolster the Kurds’ hand in future negotiations with the regime and give Kobane a seat at the Geneva talks.

Hakan Fidan, the MIT chief, is said to be in favor of rapprochement with the Syria Kurds, especially if the unity talks result in the PKK withdrawing unconditionally from Turkey. The Americans have made it clear to the SDF that their support for the talks is conditional on PKK cadres, and non-Syrians in particular, being kicked out. This may explain why Ankara has — despite occasional growls — done little to disrupt the negotiations.

But the PKK is unlikely to walk away after three decades of war in Turkey that has killed almost 40,000 people, most of them rebels, without Ankara having granted its own Kurds a single constitutionally enshrined right thus far — least of all on the back of vague US promises to support Rojava or Syrian Kurdistan.

As such, Turkish demands for the PKK to disband and leave Turkey are a dead end. By the same token, the notion that the PKK could leverage the Pentagon’s support for the SDF against Ankara has proven every bit as ill-conceived.

Ankara would likely consider any lasting rift that might result between Kobane and the PKK under American pressure as a big plus because it would weaken both. That, in turn, is why any such rift is unlikely to emerge.

The bigger worry for the Syrian Kurds is Russia. Trust in the Russians tanked after it allowed Turkey to invade Afrin in January 2018. Yet while Ankara and Damascus have issued predictably shrill statements condemning the oil deal, the Kremlin has yet to comment officially. The question is why.

Russia wants American troops gone from Syria and for Damascus to reassert full control, including over the oil. Some 90% of it lies in the Kurdish-controlled region.

It’s been trying to persuade the Kurds to strike a deal with Damascus, wielding the threat of another Turkish attack to cow them into submission. Assad has, however, shown zero interest in accommodating Kurdish demands. Kobane would in any event prefer to stick with the Americans with whom he’s worked seamlessly for six years than to sign a dodgy deal with a ruthless regime that has not stuck to the terms of any of the "local reconciliation pacts" made with the Sunni rebels. 

The most pressing question facing Syria’s Kurds is whether the oil deal with the Americans can serve, at the minimum, as a deterrent to another attack by the Turks if not as an incentive for peace with them. Delta Crescent will be operating among others in oil fields near the mainly Arab-populated town of Qahtaniyah, which Turkey has been eyeing. Or could Russia greenlight a further land grab, which would help boost Erdogan’s ebbing popularity and advance the Kremlin’s agenda of wrecking relations between Turkey and America?

One might argue that the fact that the oil deal only covers the Kurdish-dominated Hasakah province will fan Turkish paranoia about supposed US plans to establish a new Kurdish statelet on Turkey’s borders. But then as Ankara well knows, as long as US sanctions over Damascus remain in place, the project can only be commercially viable if Turkey comes on board. Moreover, the autonomous administration is looking to lure the Russians with separate oil deals. Kobane's gamble may yet pay off.

The anatomy of the deal

Delta Crescent Energy LLC, the company first cited by Al-Monitor as having signed the deal, was incorporated in the US state of Delaware in February 2019. A memorandum of understanding between the firm and the Syrian Kurdish administration was inked a month later on March 27, 2019, just as the Donald Trump administration ordered fresh sanctions against companies engaged in oil trade with the government of Syrian President Bashar al-Assad.

In April, the Treasury Department’s Office of Foreign Assets Control issued Delta Crescent Energy a waiver to operate in northeast Syria.

A 25-year-long contract to market the oil and modernize and develop oil fields that fall within the boundaries of Hasakah, a predominantly Kurdish province that is under SDF control, was signed between the US company and the Syrian Kurds in late July, sources with close knowledge of the deal told Al-Monitor.

On July 30, Secretary of State Mike Pompeo confirmed in a Senate Foreign Relations Committee hearing that the deal is backed by the United States government and “is now in implementation.”

Jim Reese, a retired Delta Force colonel, is one of the three partners who set up the company. He laid out their plans in detail to the Washington Examiner’s Tom Rogan who published these in an October 2019 column. 

Reese currently heads the North Carolina-based private security firm TigerSwan. The latter provided protection for California-based Tetra Tech staff when they began demining Raqqa after it was captured from the Islamic State (IS), The New Yorker reported.

Iraq Oil Report connected the dots, revealing the names of the remaining two partners. One is John P. Dorrier, a former executive at British-based Gulfsands Petroleum, which was granted a license to develop fields in northeastern Syria. It was forced to halt its operations in 2011 when the European Union declared sanctions against the Syrian regime. Assad’s cousin Rami Makhlouf held a 6% share in Gulfsands until the company scotched the deal.

The current deal mirrors the terms struck between Assad and Gulfsands but covers a broader swath of territory, skirting the Turkish border to the north and reaching al-Hol at its southernmost tip, the sources said. Oilfields under the SDF’s control in the Arab-heavy Deir ez-Zor province are not included in the deal, in part to head off potential conflict with local tribes.

The other partner is James Cain, a former US ambassador to Denmark who lost his son-in-law in an attack carried out by IS in Brussels on March 22, 2016. Cain told Politico, “The goal is to get production up to where it was before the civil war and sanctions.” The sources briefing Al-Monitor placed the figure at 200,000 barrels per day.

The trio was photographed is separate meetings with Iraqi Kurdistan Region President Nechirvan Barzani and the former governor of Dahuk province. They crossed the Fish Habur border gate linking Iraqi Kurdistan to northeast Syria last month.

The initial phase of the contract will involve finding buyers for the oil, the sources said. In other words, Delta will need to ensure that the KRG and Turkey are willing to either buy or help export it before it puts down real money in the project.

Already some of the crude produced in northeastern Syria makes its way to Iraqi Kurdistan at cut-rate prices and on to Turkey. The trade is facilitated by the Kurdistan Democratic Party, which is led by the Barzanis.

A Syrian Kurdish official speaking anonymously to the National Interest appeared to play down the deal, claiming that “no company had signed a contract yet.”

VOA’s Kurdish-language service quoting unnamed Syrian Kurdish officials meanwhile reported that the autonomous administration had signed a $150 million contract to build two refineries in northeastern Syria. Al-Monitor was told talks were under way on the refineries but did not confirm that any final deal had been reached and was given no details on costs. Once the Syrian Kurds begin to properly refine the oil, prices will go up, making it less lucrative for the Iraqi Kurds. If the Syrian Kurds export it directly to Turkey, both sides stand to benefit.