A week has passed since reports were circulated that the Syrian Democratic Council (SDC) affiliated with the Kurdish Democratic Union Party (PYD) had agreed to sell oil from northern Syria via an Israeli middleman, but there has still been no official Kurdish denial of them.

The only statement was issued by Riyad Drar, the Arab chairman of the SDC which represents Kurdish militias in Syria, to the Russian media denying the reports but not giving further details. Kurdish sources said the oil was still being marketed, though through a Syrian middleman.

The leaked reports had revealed a deal between SDC Chairman Ilham Ahmed and Israeli businessman Moti Kahane, by which the latter was delegated to represent the SDC in all matters related to selling Syrian oil in areas under Kurdish control and supported by US forces.

Kahane was to be in charge of exporting Syrian oil from Kurdish areas east of the Euphrates River, estimated at 125,000 barrels per day. The leaked agreement also gives him the right to drill more oil wells and increase production to 450,000 barrels a day in the future.

Syrian Kurdish sources said the oil under Kurdish control “is still being exported through a Syrian businessman who restored the oil pipeline at a cost of $40 million and 50 people killed. We cannot end his deserved right to continue to serve the interests of both sides.”

The sources told the Italian news agency AKI that “the autonomous Kurdish administration [in Syria] would not object to working with any party that brings benefits and economic gains, but there are factors that limit its ability to act entirely independently.”

“These include interests and partnerships with Syrian businessmen and understandings of what is allowed by the US. There are also boundaries that must be taken into consideration on the Syrian side, meaning the regime, since it could obstruct the deal in various ways.”

 “The partnership to market the oil is with Syrian businessmen who are at odds with key members of the Al-Assad family involved in economic issues and managing the finances of the regime’s inner circle

. These disputes have impacted Kurdish relations with the larger Syrian environment,” the sources said, referring to Syrian President Bashar Al-Assad.

Drar is the only individual issuing a statement of denial, describing reports about an alleged document signed by Ahmed to make Kahane the representative of the SDC for oil sales in areas under the control of the Syrian Democratic Forces (SDF) as “untrue and fabricated.”

 “Ahmed does not have the power to sign deals because that falls under the powers of the autonomous Kurdish administration,” the statement said.

Kahane was waiting for approval from the US, not the SDF, SDC or the autonomous Kurdish authority, to sell the oil because he wanted to prevent it from being sold to the Syrian regime or Iran, it said.

 “We will not deny our people our oil, and we will not block oil sales to our people in Syria,” the statement said.

The SDC issued a statement supporting its denial, though without giving further details. “Attempts to malign the SDC and circulate falsehoods can only make us reiterate our steadfast position on the unity and sovereignty of Syria,” it said.

Kurdish forces control 90 per cent of oil resources in Syria, including the largest oil wells, and they benefit from protection by US troops in the northeast of the country.

In an interview with Israel’s i24 News, Kahane said the deal with the Kurds focused on investing in 11 oil wells to sell 400,000 barrels a day. The sales could be made to any party or person, as long as they were not Syrian or Iranian or with money from these countries, he added.

He said he had “Kurdish approval to export 125,000 barrels of oil a day,” with ambitions to increase this to 450,000. Kahane added that he was also waiting for US approval to export the oil after the Kurds had agreed, stating that his work and cooperation with the Kurdish forces “is my own individual initiative and is not related to any official party”.

The Kurds in Syria do not reveal information regarding oil production or revenues, but experts estimate that the production from oil fields in areas under Kurdish control in Deir Al-Zor is no more than 35,000 barrels a day.

The operation is run by the autonomous administration. Before 2011, these fields produced some 250,000 barrels of oil a day, and the Kurds hope that they will still produce 125,000 barrels a day.

The Syrian oil fields have become a key source of funds for separatist Kurds in the country as they once were for the Islamic State (IS) group. The oil trade has created warlords who believe only in personal gain, though the regime’s nine-year war has also damaged the oil sector.

Between 2012 and 2014, 70 per cent of the country’s oil and gas wells came under the control of the Syrian opposition, though this was unable to operate the wells or sell the oil. Some local people benefited from the situation by building more than 500 small refineries to produce a few barrels a day, while the government maintained control over the large refineries and exports.

In 2015, IS gradually began taking control of the oil wells, while the PYD, the Syrian arm of the Turkish Kurdish Workers Party the PKK, began to take control of the wells in the north and east.

 Syrian oil production dropped after 2011 from 370,000 barrels a day to less than 70,000 barrels at a loss of $300 billion. Oil had been a safety valve for the regime, since all Syrian oil revenues over the past four decades have been sent to a private account that the president controls.

US and European sanctions on Syria’s oil sector obstructed the trade and production of oil, so the regime began selling oil to Iran and Russia. The PYD does not have the capacity to refine and market crude oil, and in 2015 it attempted to bring in experts from outside Syria to build an oil refinery.

It then made a deal with the regime for the oil to be refined at state-owned facilities, with the regime keeping a portion of it and the rest being handed to Kurdish forces.

The war in Syria has thus far killed nearly one million people, destroyed hundreds of villages and towns and several cities, and left two million people injured or with permanent disabilities. One million children have been orphaned, while the country’s infrastructure and economy have been decimated.

The war destroyed the oil industry in Syria, transforming the oil wells into sources of funding for irregular militias and creating regime and opposition warlords who chose profit over country. This is yet another tragedy of the war in Syria.

 *A version of this article appears in print in the 25 July, 2019 edition of Al-Ahram Weekly under the headline: The fight for Syrian oil