DAMASCUS (Dispatches) -- Syria’s foreign ministry said on Sunday that an American oil company had signed an agreement with U.S.-backed Kurdish militants who control northeastern oilfields in what it described as an illegal deal aimed at "stealing” Syria’s crude.
A ministry statement, published on state media, did not name the firm involved in the deal with the so-called Syrian Democratic Forces (SDF), an alliance that occupied swathes of north and east Syria with U.S. help.
Damascus "condemns in the strongest terms the agreement signed between Al-Qasd militia (SDF) and an American oil company to steal Syria’s oil under the sponsorship and support of the American administration”, the statement said.
"This agreement is null and void and has no legal basis,” it said, adding that it was a violation of Syrian sovereignty.
Syria produced around 380,000 barrels of oil per day before a war was imposed on the country following Western-backed riots in 2011.
Damascus lost control of most oil producing fields in a stretch east of the Euphrates River in Dayr al-Zawr. Western sanctions have also hit the energy industry.
U.S. President Donald Trump has said that despite a military pullback from northeast Syria, American forces would remain "where they have oil”. The Pentagon said late last year that oilfield revenues would go to the SDF.
Following Trump’s earlier insistence that his administration was solely interested in "keeping” Syrian oil, the U.S. military deployed mechanized military units to oil fields in the east of the country.
The news of the deal was first broken Al-Monitor news website last week. It quoted "well-placed sources with close knowledge of the deal” as saying that "the agreement to market oil in territory controlled by the U.S.-backed entity and to develop and modernize existing fields was inked ‘with the knowledge and encouragement of the White House”.
The sources named the company as Delta Crescent Energy LLC, a corporation organized under the laws of the state of Delaware. The sources gave no further details about the company but would only say they had been in talks for "a long time” and that it had received an OFAC license to operate in Syria.
OFAC or the Office of Foreign Assets Control of the U.S. Treasury Department administers and enforces economic and trade sanctions based on American foreign policy and national security goals against targeted foreign countries.
Last week, it sanctioned nine Syrian entities pursuant to Caesar Act which according to Foreign Minister Walid al-Muallem is aimed at creating hunger and instability.
The U.S. seizure of Syrian oilfields in Dayr al-Zawr came as Syria seemed on the brink of crowning military victories by ending the diplomatic isolation and recovering more of Syria without a bullet being fired.
Not only had Kurds invited government forces back to the northeast, but businessmen from the once hostile United Arab Emirates
visited Damascus to scout out investment opportunities and regional trade had started to pick up.
Nearly all of Syria’s main cities and towns are under government control, with foreign-backed terrorists who fought since 2011 to overthrow Assad now confined to a patch of territory near the Turkish frontier.
But Syria’s hopes of rehabilitation have been put on ice by new U.S. sanctions that will likely deter the investment the government needs to deliver on promised reconstruction.
The economy, already ravaged by a decade of war, is hit not only by sanctions but also by the fallout of another U.S.-caused financial meltdown in neighboring Lebanon that has choked off dollars.
According to experts, the U.S. is doing all it can to undermine the Syrian government’s ability to re-extend control over the country and rehabilitate its economy and Kurdish militants are just one of its tools to do so.
Sinam Mohamad, the SDF representative to the United States, confirmed via Whatsapp that Delta Crescent had signed an agreement with the militants.
The sources briefing Al-Monitor confirmed that Lindsay Graham, the Republican senator from South Carolina who is close to Trump, had spoken to SDF ringleader Mazloum Kobani and that Kobani had informed Graham of the deal and asked him to relay its details to the U.S. president.
During his testimony to the Senate Foreign Relations Committee last week, hardline U.S. Secretary of State Mike Pompeo told Graham he was "OK” with the deal. "The deal took a little longer senator than we had hoped, and now we’re in implementation,” he said.
The sources told Al-Monitor that the U.S. government had also agreed to provide two modular refineries to the Kurdish militants.
Kurdish militants and U.S. troops control most of Syria’s oil wealth, which is concentrated in and around the Rmelain fields close to the Turkish and Iraqi borders and in the Al-Omar fields further south. Production by U.S. troops is reportedly down to around 60,000 barrels per day, much of it refined in makeshift refineries and transported by leaky pipelines causing massive environmental pollution.
According to Al-Monitor, the sources said U.S. special envoy for Syria reportedly had informed Turkey about the oil deal and that Ankara had not reacted negatively. Russia was also informed and had not expressed a view, though certain fields were kept outside the deal, so as to ensure that the Syrian people outside the Kurdish zone were "not deprived of their share of the oil,” one of the sources said.