Russia, Iran Vie for Syrian Oil ‘Leftovers’

The behind-the-scenes scrap between Russia and Iran over oil wealth in northeastern Syrian regions, which are not held by the Kurdish Syrian Democratic Forces (SDF), has intensified.

Before the eruption of the crisis in 2011, Syria used to produce around 360,000 barrels of oil per day. It now stands at 80,000 bpd.

On Thursday, Minister of Oil and Mineral Resources Bassam Tohme revealed that direct and indirect losses in the sector have exceeded 92 billion dollars. He added that more than 90 percent of the country’s oil reserves are controlled by the United States and their SDF allies in regions east of the Euphrates River. These regions also boast Syria’s most important gas factories and the majority of its agricultural and water wealth.

Qamishli allies

Oil produced in areas east of the Euphrates is either locally used or sent through warlords to the Homs or Baniyas refineries in government-held regions. They are then either returned to the Kurdish-controlled region or used in regime regions.

Some of the oil is also smuggled to Iraqi Kurdistan and later Turkey to provide financial revenues to prop up the autonomous Kurdish administration east of the Euphrates. Observers believes these operations provide some 400 million dollars annually that go to supporting the administration and its 100,000 SDF fighters and policemen.

Western sanctions have targeted mediators between Damascus and Qamishli, as well as Syria’s entire oil sector.

The autonomous administration and American companies have, meanwhile, discussed oil investments. In April 2020, the US Treasury Department granted a rare license allowing little known Delta Crescent Energy to operate in the country.

The company, incorporated in Delaware in 2019, was founded by former Delta Force officer James Reese, former US Ambassador to Denmark James Cain, and John P. Dorrier Jr., a former executive at GulfSands Petroleum, a UK-based oil company that had previously worked in northeastern Syria.

In July, Republican Senator Lindsey Graham said that SDF General Commander Mazloum Abdi informed him that a deal had been signed with an American company to “modernize the oil fields in northeastern Syria”.

The deal was slammed by Damascus, Moscow, Tehran and Ankara. Tohme said the agreement sought to “steal” the Syrian people’s resources.

Former US President Donald Trump said that he was keeping American forces in Syria to protect oil wells and prevent ISIS from capturing them.

Damascus’ allies

Damascus has sought to cut its losses by obtaining oil derivatives from Iran. These naval shipments have, however, been intercepted by the US and Israel. The latest such obstruction took place on Wednesday when a vessel loaded with derivates was barred from reaching Syrian ports.

As Syria is in the grips of a stifling economic crisis and western sanctions, Russia and Iran’s attention has shifted towards investing in oil and gas fields that remain under Damascus’ control. Syria also boasts phosphates reserves.

In 2017, Damascus and Tehran signed four strategic deals for the Iran Revolutionary Guards to run a third mobile phone operator, invest in phosphates for the next 99 years, seize agricultural and industrial lands and set up an oil port on the Mediterranean.

In September 2020, Russia and Syria held a series of meetings aimed at bolstering economic relations. They also upped their military cooperation and deployment at the Latakia and Tartus bases. Soon after Russia’s military intervention in Syria in 2015, it signed an agreement with Damascus that would allow Wagner mercenaries to protect and liberate oil and gas installations from ISIS. In return, it would receive 25 percent of their revenues.

Estimates from 2018 said that some 2,500 Wagner operatives and some 20,000 to 25,000 Iran-backed militants were present in Syria.

With the fighting dying down in March 2020, the race between Russia and Iran to claim Syrian sovereign rights intensified. Iranian militants, as well as the Lebanese Hezbollah and Fatemiyoun fighters from Iraq, have seized the oil and gas fields in the Deir Ezzor and Raqqa countrysides. Pro-Russia forces have, however, sought to expel them.

Russia has sought to obtain oil investment contracts in the Mediterranean. Damascus approved an agreement granting a Russian firm exclusive rights to drill for oil in Syria’s offshore bloc in its exclusive economic zone off that stretches from off the coast of Tartus to the border with Lebanon. The deal lasts 29 years.

Iran still controls the Alboukamal oil wells, which it captured in 2017. It also controls phosphate mines in the Palmyra countryside in spite of repeated attempts by Moscow to seize them.

American officials believe that Russia and Iran’s race for Syria’s resources will grant them a crucial negotiations card when it comes to the war-torn country’s future.