LONDON/AMMAN — Russia vetoed a UN security resolution on Friday that would have extended the sole remaining route for cross-border aid to Syria by a year, putting millions of Syrians at further risk of famine and disease. The veto is likely to have been prompted in part by retaliatory spite over crushing US and EU sanctions on Russia, as Syria grapples with a prolonged killer drought and the world with dwindling grain supplies because of Russia’s ongoing invasion of Ukraine.
The UN says that Syrians who lack access to sufficient food stand at a record 12.4 million.
Turkey’s President Recep Tayyip Erdogan has been seeking to speak to Russia’s President Vladimir Putin for the past week in a bid to secure his approval to extend the mandate, which was set to expire on Sunday, well-placed sources speaking not for attribution told Al-Monitor.
Russia says it will only agree to a six-month extension subject to renewal with a commitment that from thereon all aid to Syria would be disbursed by the regime in Damascus. As Norwegian and Irish diplomats frantically worked on the wording of a compromise agreement, Washington’s UN envoy Linda Thomas-Greenfield warned via Twitter that without the UN, 70% percent of Syria’s food needs would go unmet. “An entire generation is at risk.”
Idlib, the rebel-held province bordering Turkey that is home to more than two million internally displaced civilians and to which the aid directly flows, would be the worst hit. Should the aid be cut off, it would likely trigger a further influx of refugees to Turkey even as anti-immigrant feelings there turn violent.
Amid all the hand-wringing, one London-based oil company that produced oil in Syria before its descent into war in 2011, is lobbying for an initiative that would see the proceeds of Syrian oil being used for aid, with the money going to the UN rather than Damascus.
John Bell, managing director of Gulfsands Petroleum, told Al-Monitor in a recent interview that his company was “pioneering a concept whereby international oil companies would return to operations in northeast Syria, with revenues from oil sales contractually entitled to the Syrian Arab Republic instead deposited into an internationally administered fund and disbursed, by stakeholder agreement, to finance humanitarian, economic and security projects across the country for the benefit of all Syrian people.”
“This would be conducted in a sanction-compliant manner, in cooperation with the international community and Syrian stakeholders and in line with UN Resolution 2285,” Bell added.
Bell estimated that the Syrian oil and gas industry as a whole could be rebuilt and developed to produce over 500,000 barrels of crude per day, generating annual gross revenue of over $20 billion at today’s oil prices.
Noting that comparable escrow-type structures have been devised for other countries under international sanctions, notably Iraq and Iran, Bell said he had raised the initiative with relevant White House, State Department and the UK’s Foreign, Commonwealth and Development Office officials. Discussions, while in the early stages, “are ongoing,” Bell said.
Around a third of the proceeds would go to contractors and international oil companies. Gulfsands says the initiative would require agreement from the Syrian stakeholders, which ostensibly refers to the regime and the SDF, as well as from the international oil companies, and could be implemented through international fora such as the United Nations. It would also require the support of international governments including the United States, the United Kingdom, Russia, Turkey and other regional actors, Gulfsands says.
The idea sounds attractive. Syria’s future remains unpredictable and donor generosity is focused on Ukraine. The uncertainty is compounded by the Biden administration’s Syria policy that is currently centered on isolating the regime and preventing the Islamic State from staging a comeback. Washington says it will not allow President Bashar al-Assad to regain international legitimacy, yet it's offering no coherent alternative, not least because President Joe Biden has zero appetite for backing regime change.
However, diplomatic sources speaking not for attribution to Al-Monitor called Gulfsands’ proposal unrealistic. With the de facto partitioning of Syria between the Russian- and Iran-backed regime to the south, the US-backed Kurds to the northeast and the Turkish-backed Sunni rebels to the northwest, “How you get all of these guys who are at each other’s throats around the same table is anybody’s guess,” one of the officials said.
Iraq’s oil-for-food program that was meant to keep its toppled dictator Saddam Hussain in a sanctions straitjacket was riddled with loopholes. While UN agencies delivered assistance in Iraqi Kurdistan, in areas under Saddam’s control, “the government was allowed to buy commodities to match the government ration cards Iraqis — in good standing with the regime — had,” recalled Robert Deutsch, a former senior US diplomat who dealt with the Iraq file at the time. “So it was used by Saddam both to cheat and as an element of control,” he told Al-Monitor. “We believe that our initiative has many differences from the ill-fated Iraqi oil-for-food program, though we will of course ensure that any lessons learnt from that program can be incorporated into our initiative,” Bell insisted.
Middle East Economic Survey, an industry publication, suggested the fact that Gulfsands chairman Mikhail Kroupeev, a top shareholder in the company ,“has in the past been seen as having ties to the Russian authorities” was likely “a complicating factor.” Gulfsands flatly denies the claims. “Mr. Kroupeev has no connections whatsoever to the Kremlin or any Russian government authority,” Bell said. International oil companies such as Shell and France’s TotalEnergies that were active in Syria prior to the outbreak of the conflict have yet to back Gulfsands’ push. But the company appears determined to keep at it, taking its case to the media over the past month.
Others note that Gulfsands has a vested interest in peddling the proposal because its large oil field in northeast Syria, Block 26, is its sole major asset. Moreover, it's unclear what role if any the Sunni opposition, notably Hayat Tahrir Al Sham which controls Idlib and is designated as a terrorist group by the United States and the UN, would have in any of the discussions over sharing the oil and its proceeds.
The State Department and the White House did not respond to Al-Monitor’s request for comment.
The Foreign Office would only say, “The UK is clear that only a political solution can deliver lasting peace and sustainable economic recovery for Syria.”
A UK official speaking on background said, “We remain in support of international sanctions on Syria and oppose reconstruction in the absence of progress in the political process,” but declined to elaborate.
The bulk of Syria’s oil wealth lies in the Kurdish-controlled zone that is run by the US-backed Autonomous Administration of Northeast Syria or AANES. The Syrian government estimates that the country’s total oil output was 86,000 barrels per day in 2021. That is roughly a quarter of the 353,000 barrels per day produced in 2011, which accounted for roughly a quarter of the regime’s revenues.
Prior to the outbreak of the conflict in 2011, Gulfsands operated Block 26 near Rmeilan close to Syria’s borders with Turkey and Iraq, where most of the country’s oil is produced. The field was spared the devastation wrought by IS when it seized control of other swathes of Syria including oil facilities further south in Deir ez-Zor. Bell estimates that the block is yielding up to 20,000 barrels of crude per day.
The idea of using the oil proceeds to finance humanitarian assistance and rebuilding shattered infrastructure was touted during the Trump administration — for the Kurdish-run zone alone. It granted Delta Crescent Energy, an obscure Delaware-based entity founded among others by former Gulfsands executive John P. Dorrier Jr. a waiver to develop and modernize existing fields.
The government refused to extend the waiver last year, saying that unlike Trump's, the Biden administration was not maintaining a troop presence in Syria “for the oil.”
Lindsay Graham, the Republican senator from South Carolina who is close to the former president and recently traveled to northeast Syria, is believed to be seeking to revive the idea of using oil to lure Turkey into a deal with the Syrian Kurds, mirroring that which Turkey has with Iraq’s Kurds, according to sources familiar with the substance of his talks with Syrian Kurdish leaders. The idea is that this would help avert yet another Turkish invasion. Graham hinted as much in an op-ed for Fox News. Salih Muslim, the co-chair of the Democratic Unity Party, which shares power in the AANES, said he was not aware of Graham’s alleged proposal. Graham’s office had not responded to a request for comment by publication time.
Damascus was outraged by Trump's actions, saying the United States was “stealing” its oil.
Bell is accusing the AANES, its military arm, the Syrian Democratic Forces (SDF), and its political arm, the Syrian Democratic Council (SDC), of much the same.
“Neither the SDF, the SDC nor the AANES have any sovereign rights under Syrian or international law. The AANES is stealing our property. The SDF and its affiliates are stealing what is legally contracted to Gulfsands and other commercial entities. At the same time, the Syrian population has lost out on billions of dollars,” Bell contended.
He continued, “It was bad enough that the SDF were taking the oil on such a large scale, but we were very shocked to learn that this was being aided and abetted by a license given to Delta Crescent” by the US Treasury’s Office of Financial Assets Control.
Bell said Gulfsands was being denied access to visit the block. “The oil is being sold through opaque, black market practices. It is illegal and unsustainable.”
Either way, the oil infrastructure is in dire need of rehabilitation. Production in its existing form is wreaking environmental havoc, as chillingly documented by the Dutch nongovernmental organization PAX.
A return of the international oil companies could clearly help mitigate the growing nightmare.
The Assad regime has little interest in helping to repair the oil infrastructure unless it is allowed to regain control over the oil fields, something Russia, its top ally, literally pushed for when Wagner mercenaries tried to overrun SDF-protected fields in Deir ez-Zor, only to be repelled by US forces.
The Biden administration exempted the northeast from Caesar sanctions earlier this year but the waiver does not extend to the energy sector, meaning its crumbling infrastructure will continue to poison the land.
The question of how Syrian Kurdish authorities manage the oil wealth is shrouded in secrecy by their own admission. A senior official in the Al Jazeera oil company that was set up by the AANES said, “Wallah we don’t talk about the oil issue. It’s a file that — one doesn’t know how to talk about it.”
The official who spoke to Al-Monitor on condition that he not be identified denied that the AANES was involved in theft of any kind. “We are not stealing the oil. The area was liberated by the SDF. And we’re using the oil that’s here to benefit residents of the area. We’re using the oil in the area to serve the Syrian people that are in the area. And a portion even goes by way of traders to the regime areas, where it’s refined, and is also in the service of the Syrian people there. These accusations have no basis,” the official said. The official noted that the administration “uses oil revenues in service provision" and "is providing services — education, health, municipalities, roads, fuels, bread, bakeries and buying wheat. All of these services are certainly a result of the revenues and the work that’s done in the area’s oil sector. So, all of it — entirely — is used to benefit the area’s people.”
The official grew evasive when asked about how much of the oil was sold to the Syrian government and how, replying, “In general, there’s no stability in the production process. So, there is variation in the amounts of oil that are sold to traders or refined. This issue is connected to difficult circumstances in terms of importing the materials necessary for production.”
Sources who closely follow the trade and Al-Monitor’s own investigations suggest that most of the oil is being sold at rock-bottom prices to the Kurdistan Region of Iraq. Initially, a lot of the Syrian oil was being mixed in with the Iraqi Kurds’ own crude and sent to Turkey for onward export. Now, the bulk is believed to be consumed locally in Iraqi Kurdistan, where it is refined, freeing up more of the region's own oil for export and freeing Ankara of the embarrassment of profiting from Syrian Kurds' oil even as it continues to attack their forces on the grounds that they are “terrorists.”
Bell reckons that the oil is being sold to the Iraqi Kurds at $15-$19 per barrel when it's being traded at over $110 in international markets. "They are good barrels, which should sell at only a small discount to Brent,” Bell said. The conventional wisdom is that the Syrian Kurds are obliged to sell at such a vast discount in order to keep their borders with the Kurdistan region of Iraq open. The Semalka Fishkhabur border crossing is a critical supply route for incoming aid and fuel and equipment for the US-led coalition.
The rest of the oil from Rmeilan is thought to be partly shared with or sold to the Syrian regime via the shadowy Katerji group. The Katerji company has been widely reported as the middle man facilitating the oil trade between the Autonomous Administration and the Syrian government, with Katerji trucks transporting oil from AANES-held territory to refineries in government areas.
The degree of compartmentalization in AANES-regime relations is reflected by the number of Syrian government employees who continue to operate in the Kurdish-controlled zone.
The Al Jazeera official confirmed that engineers and technicians who were employed by the regime-run Syrian Petroleum Company continue to be retained. “We rely on experienced people, engineers, technicians, workers with experience in oil. Anyone with experience in oil — even if he’s retired, or whatever — we try to benefit from him. We don’t have a problem if they are still officially employees of the regime — but for your info, the regime salaries aren’t enough to support them," the official explained, saying the administration "takes responsibility” for them.
“At the end of the day we need this expertise and we need these people to work,” the official said.