A Turkish proposal to share Syria’s oil fields with Russia highlights a latent struggle for the country’s most prized resource, which had fallen to Kurdish militia dependent on the US.
Turkish President Recep Tayyip Erdogan indicated this week that he offered President Vladimir Putin joint revenue management for oilfields in eastern Syria to use for reconstruction.
An understanding between Ankara and Washington in October let Turkey invade areas that had been captured by Kurdish militia in north-east Syria, but kept the Turkish forces and their Syrian rebel proxies away from the oilfields.
Turkey hopes to turn the 30 kilometre deep strip and other border territories it took over in the past two years into a home for refugees it is hosting.
Ankara unveiled plans to build cities and infrastructure and then move more than three million Syrian refugees in Turkey into the zones, which would supposedly be free from regime bombardment.
Mr Erdogan said that if Mr Putin agreed, “we can do the construction and through the oil obtained there, we can help destroyed Syria get on its feet".
"If such a step can be taken here, I can even make the same offer to [US President Donald] Trump," Mr Erdogan said.
"Instead of terrorists benefiting here, we would have the opportunity to rebuild Syria."
He indicated that Mr Putin had not committed to the plan and there was no official reaction from Russia.
Deir Ezzor and Hasakah governorates in eastern Syria account for most of Syria’s oil production.
Most of the oilfields in the regions are with the Kurdish People’s Protection Units (YPG), the military wing of the Democratic Union Party (PYD).
The YPG is closely linked with the Turkish Kurdish Worker’s Party (PKK), which is listed as a terrorist organisation in Turkey, the US and in much of Western Europe.
Despite reducing its military presence in Syria, the US kept troops that prevented the regime of President Bashar Al Assad from taking over the oilfields in Deir Ezzor and stopped Turkey from overrunning Rmelan, a major oilfield in Hasakah on the border.
Mr Trump said in October that he believed US oil companies should “take some of the oil”.
The regime’s loose grip on the oilfields created a new class of smugglers and local barons in Syria’s east.
There, corruption and mismanagement of agriculture contributed to near-famine in the decade before the 2011 revolt against Assad family rule.
A new wealthy class emerged among the Kurds of eastern Syria by taking on an intermediary role through links with Kurdish militia commanders and the Assad regime.
Among the new profiteers is a Kurdish merchant known as Abu Al Dalu from the city of Qamishli.
He is connected with the YPG and with Muhammad Al Qatirji, a regime associate under US sanctions, Kurdish sources and European diplomats say.
The US Treasury describes Mr Al Qatirji as having enbled “fuel trade between the regime and ISIS, including providing oil products to ISIS-controlled territory”.
A Kurdish source working with the YPG administration in Hasakah said oil production, mainly from Rmelan oilfield and Al Omar in Deir Ezzor, brings in about $100 million a month.
The revenue comes from sales to regime and rebel areas, as well as to Iraq and smuggling to Turkey.
“The oil not only finances YPG salaries but has become a major source for the PKK in Qandil,” the source said, referring to the PKK’s headquarters in the mountains of northern Iraq.
Control over the oil and Syria’s border crossings were main points of contention in talks between the regime and the YPG, which had picked up since the Turkish incursion in October then subsided, European diplomats said.
Syrian Oil Ministry figures put oil production in Syria in 2010, the last full year before the revolt, at 380,000 barrels per day.
But industry executives working in Syria at the time said actual production was significantly lower due to dilapidated infrastructure and US sanctions, which have intensified since the revolt.
Today Syria’s oil output, mostly from regions under Kurdish militia control, is estimated at 50,000-70,000 barrels per day.
Jihad Yazigi, editor of the Syria Report economic and business newsletter, said that although Syria's output could help to meet some of Turkey's oil needs, Mr Erdogan's main aim was to starve his Kurdish enemies of the revenues.
“A direct takeover by Turkey would bring with it problems related to sanctions and legal issues,” Yazigi said.
“Erdogan wants to take the oilfields out of the hands of the PKK.”
