OPINION - Oil production, trade of terrorist group PKK/YPG

By Omer Ozkizilcik

- The author is a foreign policy and security expert

ISTANBUL (AA) — Oil revenues constitute an important source of income for the "Autonomous Administration of Northern and Eastern Syria," the so-called statelet formed by the terrorist organization PKK/YPG. According to statements made by the group, its 2022 budget totaled $780 million, of which oil revenues constituted 77%. These statements raise some questions. What is the size of the oil resources in Syria? What is this terrorist organization's real income from oil? How much control does the PKK/YPG have over oil trade in Syria? What routes does it use to sell oil? What front companies does it use?

- Oil production and resources in Syria

Between 66,000 and 70,000 barrels of oil are produced daily in the regions controlled by the PKK/YPG. Average daily output across Syria totals around 85,900 barrels. This figure was 353,000 barrels in 2011. John Bell, executive chairman of Gulfsands Petroleum, claims that with the necessary investments in the country's oil infrastructure, it could produce 500,000 barrels of oil per day. At current prices, Syria's oil resources could generate more than $20 billion annually. Former Gulfsands Petroleum board member John P. Dorrier Jr. is one of the founders of Delta Crescent Energy, which was exempted from sanctions by former US President Donald Trump.

To understand the size of Syria's oil resources and the oil produced by the PKK/YPG, it would be useful to compare this output with the daily oil consumption in Türkiye alone. According to data from the Global Economic Information Data Bank (CEIC), Türkiye's daily oil consumption in 2021 was 939,000 barrels. This information shows that the oil produced in PKK/YPG-held areas covers only 7% of Türkiye's needs. With investments, Syria's total daily oil production, as estimated by Bell, could meet about half of Türkiye's requirements.

Another comparison to help understand the scale of oil production in Syria can be made with output in Türkiye. The Turkish Petroleum Corporation (TPAO) announced that with newly drilled wells, Türkiye's daily domestic oil output has reached an all-time high of 75,052 barrels of oil equivalent. The 70,000 barrels of oil produced by the terrorist organization per day is thus less than Türkiye's output.

- One source of income: Oil

The PKK/KCK terrorist organization generates income from various criminal activities. For instance, it is reported that the organization earns approximately $1.5 billion annually solely from drug trafficking. While the exact extent of the income acquired by the organization under the guise of "donations" in European countries is not precisely known, petroleum production stands as its most significant source of revenue, surpassing even drug trafficking. The $602 million allocated to the budget of the "Northern and Eastern Syria Autonomous Administration" represents only a fraction of actual income.

To estimate the actual income derived from the organization's oil production, one must examine its production of oil in the field and its sales. In areas controlled by the PKK/YPG, an annual production of 24.09 million to 25.55 million barrels of oil takes place. When analyzed based on the current price of Brent crude, this has a revenue potential of around $2.194 billion annually. However, due to the poor quality of oil production, technical deficiencies, logistical issues, and legal infrastructure, it is known that the YPG earns less than this. The YPG is reported to sell a barrel of oil for $15-$19.

Other sources indicate that the YPG earns between $15 and $19 per barrel and pays $15 to the Syrian government, while intermediaries earn $40-$50. Since almost all of these intermediaries are members of the YPG, it can be estimated that the organization's total annual oil revenue is between $1.324 billion and $1.762 billion.

There is a gap of about $1 million between the organization's official and unofficial revenue figures. While the so-called "official" authorities of the PKK/YPG claim that the terror group earned $602 million from the oil trade, the remaining $1 billion is used for the terrorist organization's own purposes. For example, $602 million goes to the "Northern and Eastern Syria Autonomous Administration's" official institutions, while $1 billion enters the PKK/YPG terrorist organization's coffers and is used in Syria, Iraq, Iran, and Türkiye.

Although this estimate may not be totally accurate, it is crucial in demonstrating the value of oil production for the organization. Additionally, to grasp the significance of this financial source for the organization, one can make the following comparison: Total official support the organization received from the US this year, including salaries, weapons, equipment, and ammunition, is $160 million. Whether the claimed income from oil production is $602 million or more than $1 billion, as the organization asserts, it underscores the importance of oil production for the terror group.

- 3 separate sales routes

Analyzing the pathways through which the terrorist organization sells its primary source of income highlights three prominent routes. In order of importance, the first is its sales to the Kurdistan Regional Government (KRG) of Iraq. The trade of oil between the PKK/YPG and the KRG appears to take place through the Fish-Khabur border crossing and is unofficial. The oil transported by the PKK/YPG through intermediaries is brought into the system by the organization's stakeholders in the KRG and becomes part of the region's oil production. The oil purchased at lower cost in the PKK/YPG-held areas is later sold worldwide along with the KRG oil.

The second route is directed toward areas controlled by the Syrian government. It has been reported by many media sources, that Katerji Group, known for being close to the Damascus regime, plays an active role in local oil trade in the region. The PKK/YPG terrorist organization facilitates its oil trade with the Damascus government through this group. To ensure the security of this trade, Katerji Group has established an independent militia. A Wall Street Journal report in early 2019 clearly showed that the US- and EU-sanctioned Katerji Group continues to engage in trading oil between the PKK/YPG and the Syrian regime.

The third oil sales route used by the PKK/YPG is directed towards areas controlled by the Syrian Interim Government. The oil smuggled into that region through intermediaries is then sold at local gas stations. This oil is later transferred to the Idlib region. Although an alternative oil supply route has been established to the Syrian Interim Government areas via Türkiye, Turkish oil is more expensive as it is of higher quality. Two different diesel fuels are supplied from Türkiye to this area. The high-quality oil going to the Syrian Interim Government areas is almost twice as expensive as the smuggled PKK/YPG oil. The lower-quality oil from Türkiye is still more expensive than oil brought from the PKK/YPG region. Due to economic conditions in the region, the smuggled oil is also used.

In short, contrary to the claims of some conspiracy theorists, Syria has no highly valuable oil resources. However, the existing oil resources are a crucial source of income for the PKK/YPG terrorist organization.

*Opinions expressed in this article are the author's own and do not necessarily reflect the editorial policy of Anadolu.

*Writing by Merve Berker in Ankara