Abu Dhabi, UAEFriday 15 November 2019

Why north-eastern Syria is so critical

The region holds nearly all of the country’s oil

Displaced people, fleeing from the countryside of the Syrian Kurdish town of Ras al-Ain along the border with Turkey, ride a motorcycle together along a road on the outskirts of the nearby town of Tal Tamr on October 16, 2019. AFP
Displaced people, fleeing from the countryside of the Syrian Kurdish town of Ras al-Ain along the border with Turkey, ride a motorcycle together along a road on the outskirts of the nearby town of Tal Tamr on October 16, 2019. AFP

For an area not included in the dismissive term “useful Syria”, the country’s north-east is much fought-over. Kurdish-led forces, the US, ISIS, Turkey and Syrian President Bashar Al-Assad’s regime have all been engaged there as part of the multifaceted civil war. Now Assad’s return is the final piece of cementing his control over the ruined country, while the Turkish incursion raises unappreciated risks.

As I noted in December, the north-east holds nearly all of Syria’s oil, and the Kurdish-led Syrian Defence Forces (SDF) controlled about 60,000 barrels per day of output. Pipelines run from the far north-east and the eastern oil centre of Deir Ezzor to the refineries at Homs and Banias.

Heavily damaged by the US-led air campaign against ISIS, these fields are still vital to a future Syrian economy. There were protests in May in Assad-held areas over shortages of cooking gas, and Syria has to import about 30-60,000 barrels per day of crude oil from Iran. This is likely not paid for, but attracts unwelcome attention, as with the Adrian Darya 1 tanker detained in Gibraltar in August in line with the EU embargo on Syria, then released last month, which despite assurances still sailed to discharge its cargo in Syria.

Russia – and more specifically Russian companies – want to benefit economically from their support, and have more to offer than Assad’s other chief ally, Iran. Russia already reached an agreement in January last year to exploit the limited oil fields under Damascus’s control. In February 2018, Stroytransgaz, controlled by Gennady Timchenko, who is well-connected in Moscow, concluded a deal for another significant natural resource, phosphates, mostly in the central area around Palmyra. Mr Timchenko, founder of oil trading giant Gunvor, and leading investor in liquefied natural gas upstart Novatek, was placed under US sanctions following the Russian annexation of Crimea in 2014.

Near Kobane, in the middle of the Turkish operation, is the large Lafarge cement plant. And the Euphrates has formed the border between Assad and the SDF areas, its water and the electricity from its dams another crucial lever of control. The Palmyra area also produces most of Syria’s gas, vital for power generation when reconstruction gets underway.

Now that the SDF has been forced by the Turkish incursion to concede to the return of Syrian government forces to the north-east, the Russians may have additional opportunities to exploit Syrian petroleum, something of an irony for the “anti-imperialist” commentators who believe the war was a western plot over oil and gas.

The revenues from hydrocarbons, phosphates and cement – whatever does not end up in Russian or Iranian hands – will finance the restoration of the regime’s grip. US President Donald Trump’s tweet that “We’ve taken control of the oil in the Middle East, the oil that everybody was worried about”, is understandable only if “we” means Assad, Iran and Russia.

Turkey’s role is different. The Syrian oil fields do not seem to be an objective, with Ankara probably happy as long as the revenues do not go to the Syrian Kurdish groups. This contrasts with the autonomous Kurdistan region of Iraq, where Turkey has forged cooperation with the dominant Kurdistan Democratic Party. The region exports its oil to the Mediterranean via a pipeline through Turkey, and Russia’s state giant Rosneft agreed in 2018 to develop gas exports to Turkey.

That oil pipeline has previously been a target of attacks by the PKK, the Kurdish group in Turkey considered a terrorist organisation by Ankara, which has close relations with the Syrian Kurdish leadership. They might well strike again as retaliation for the Turkish assault, and as retribution for their KDP rivals.

After green-lighting the invasion, the Trump administration then threatened that it could “swiftly destroy Turkey’s economy”. Indeed, the Turkish economy is shaky and heavily dependent on external financing. The relationship between Donald Trump and Recep Tayyip Erdoğan is murky, but the US congress has threatened sanctions. If Turkey becomes bogged down in north-eastern Syria, a future administration might also be drawn into imposing penalties on it.

One possible measure appears a rare policy win-win for Washington. Iran exports about $2 billion (Dh7.3bn) worth of gas to Turkey each year. The US has persistently shied away from enforcing its sanctions on this trade. Indeed, in late 2017, Trump leaned on then-Secretary of State Rex Tillerson to persuade the Justice Department to halt a case against Reza Zarrab, a client of Rudy Giuliani’s. Mr Zarrab ran a network facilitating payments to Iran, including the “gold for gas” trade, and paying huge bribes to senior Turkish politicians and bank officials. Mr Erdoğan was linked though not directly implicated, and lobbied for Mr Zarrab’s release.

The constraints of its pipeline infrastructure mean that, with winter coming, Turkey has no easy way of replacing Iranian gas in its eastern provinces. A cut-off of Iranian gas would be brutal on the inhabitants of that relatively poor area, but would punish Turkey and Tehran at once. The growing American addiction to sanctions may make such a measure attractive. If imposed, it might take Turkey several years to rejig its pipelines enough to bring in more Russian gas or finally sign on the Iraqi Kurdish deal.

For domestic political and security reasons, Ankara has taken a risky step, betting on the forbearance or incoherence of the Trump administration. Moscow, Tehran and Damascus have been handed an unforced win. The resources of north-eastern Syria are now yet again the plaything of distant capitals, while the local people suffer.

Robin M Mills is CEO of Qamar Energy, and author of The Myth of the Oil Crisis

Updated: October 20, 2019 08:22 AM

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