US company obtains waiver to develop oil fields in northeast Syria

ERBIL (Kurdistan 24) – The US Treasury Department has extended a waiver allowing a little-known American company, Delta Crescent Energy, to develop oil fields in northeastern Syria.

Sen. Lindsey Graham (R, South Carolina) first revealed on July 30 that the Kurdish-led Syrian Democratic Forces (SDF), the partner of the anti-ISIS Coalition in northeast Syria, had signed a deal with a US company to modernize oilfields there.

Graham’s remarks came during testimony from Secretary of State Mike Pompeo before the Senate Foreign Relations Committee on the State Department’s budget for the next fiscal year. 

Read More: Pompeo supports SDF agreement with US company to modernize Syrian oil fields 

Pompeo affirmed his support for the oil agreement and seemed to suggest that the State Department had played a key role in arranging it. “We are,” Pompeo replied, and Graham responded, “That would be a great way to help everybody in northeastern Syria.”

“The deal took a little longer than we had hoped,” Pompeo added, implying that the State Department had been involved in arranging it. 

Al Monitor confirmed earlier this week that it involved the largely unknown US company Delta Crescent Energy. Iraq Oil Report has written that Delta Crescent is led by a mix of former diplomats and US military veterans: John Dorrier, Jim Reese, and James Cain. 

Dorrier is the founder and former chief executive of Gulfsands Petroleum, which had a contract in northeast Syria until it had to stop operations due to EU sanctions against the Syrian regime, according to Iraq Oil Report.

The news site also reported, “Cain is a lawyer with U.S. law firm Kilpatrick Townshend, which he rejoined following a four year stint as U.S. ambassador to Denmark. He appears to be instrumental in securing political support in Washington. Reese is the founder of the security firm TigerSwan, which has held contracts in Iraq.”

TigerSwan, however, also held previous contracts in northeastern Syria.

The New Yorker reported in 2018 that TigerSwan, a private military contractor out of North Carolina, provided security for demining activities in Raqqa conducted by Tetra Tech, a construction and engineering firm based in California.

According to the company website, Tetra Tech has cleared areas of more than “7 million square meters in and around urban communities, including Manbij, Tabqah, and Raqqah” since 2016. As a result, it has been able to develop local contacts in northeastern Syria since these cities were liberated from the Islamic State by the SDF.

Moreover, Reese told the Washington Examiner as long ago as October that he and his two partners had filed an application to the federal government for a plan that would be a US-led effort to develop oil fields for the benefit of the Kurds and Sunni Arab tribes in the area, as well as the United States.

He argued this could also attract President Trump’s support for an eastern security zone and address his “concerns that the US gets nothing out of the Middle East apart from lost lives and depleted treasure.” 

Politico reported on Monday that Delta Crescent Energy has been in talks with the Kurds for more than a year but only received a license from the Treasury Department’s Office of Foreign Assets Control for the work in April, citing a State Department official and a Syrian source familiar with the discussions.

After US President Donald Trump decided last year to withdraw US forces from northeast Syria following a phone conversation with Turkish President Recep Tayyip Erdogan, Graham played a key role in convincing Trump to keep troops there in order prevent the oil fields from falling into the hands of Iran or the Islamic State.

Read More: Americans’ support for Kurds helps explain Trump’s Syrian reversal 

As a result, there are still US troops in the Hasakah and Deir al-Zor, which contain the majority of Syria’s oil resources even as the US withdrew from areas surrounding Kobani, Manbij, and Raqqa.

Nevertheless, neither the SDF nor the Autonomous Administration of North and East of Syria (AANES) has confirmed that any agreement has been made. They were also reluctant to make any comments to the press on the deal due to the potential regional backlash.

The Syrian government quickly condemned the deal on Sunday as an attempt to “steal Syrian oil.” Turkey did the same on the following day, claiming it would advance the “separatist agenda” of the SDF.

Both governments fear that any such deal could give more recognition to the Syrian Kurds that so far have received limited recognition for their sacrifices and defeat of the Islamic State in northern Syria and have been excluded from the Geneva peace talks.

Therefore, Abed Hamed al-Mehbash, the co-chair of AANES, was quoted by the local North Press news agency saying that the administration is still studying requests by “many Russian and American companies to operate in north and east Syria.”

“The companies requested to invest in the service sector in the region,” he added.

Thomas McClure, a Syria-based researcher at the Rojava Information Center, told Kurdistan 24 that this silence seems to indicate that they were not expecting this news to be made public right now fearing possible repercussions from Damascus or Turkey.

However, he underlined that the potential deal should not be made to sound bigger than it truly is, saying, “It’s a small deal for two refineries to be made for a small portion of the region’s oil to be processed, and potentially be transferred out of northeast Syria. This is what is being talked about here.”

Nevertheless, he added that it could mark the beginning of a more constructive approach from the United States towards the oil question in northeastern Syria after several years of the “great inconsistency” of putting pressure on the local administration not to sell oil to the Syrian regime while at the same time restricting them from selling oil abroad through US sanctions.

“So it could be that this deal is the first tentative step towards the more healthy balanced relationship, which could bring great benefits for northeast Syria.”

Editing by John J. Catherine