Tag Archives: Syria

Green is the New Black: Making a Gas Cartel

As the disastrous civil war in Syria stretches into its sixth year, the conflict is beginning to take shape as a struggle for influence between Russia and the United States and their respective proxies. The Russian interest in Syria, initially limited to protecting the naval base in Tartus and keeping Bashar al-Assad in power, is now widely believed to have a regional and global power dynamic. Russia controls 26% of proven global natural gas reserves and has long been frustrated by its inability to export to customers other than the European Union (EU) and NATO member states. Not only does this geographic reality leave Russia dependent upon a single block of customers that has access to other suppliers, but it limits Moscow’s ability to influence politics with its overwhelming market share. In late 2015 however, the Russian military mission in Syria began to present other opportunities to exploit the politics and the pipelines that crisscross that war-torn region, thus giving birth to the prospect of a new natural gas cartel.

The global energy market is changing. Traditional, fossil-based energy supplies like coal and oil are becoming increasingly expensive to find and extract. Political turmoil in the Middle East coupled with popular pressure to address climate change, make natural gas a more attractive option for future energy needs, particularly in Europe. With average global gas consumption likely to increase approximately 1.6% annually until 2040, Europe needs a strategy to secure supplies from beyond the Russian monopoly. This is not a minor concern in Brussels. Moscow’s 2014 closure of gas pipelines into Ukraine highlighted the linkage of Europe’s energy future to Russia’s political ambitions, yet EU sanctions against the Russian oil and gas industry are seen as a delayed and ineffective western response. Europe, like Russia, now has its eye on massive natural gas reserves in the Middle East.

A Layered Strategy

The war in Syria is a catalyst for strategic cooperation between Russia and Iran. By bringing together the combined weight of their massive natural gas reserves, Moscow and Tehran would be able to influence Europe in powerful ways. If they bring Qatar’s reserves into the deal they could create an OPEC-like gas cartel with control of 60% of the world’s reserves; a frightening degree of dominance over the increasingly strategic commodity. However, there are many geographic and political obstacles to this ambition, and it is in these spaces the Russian strategy is taking shape.

Russia Natural Gas
Together, Russia, Iran, and Qatar possess more natural gas reserves than the rest of the world combined. Photo credit: http://www.energybc.ca/naturalgas.html

Distribution of Iranian reserves to Europe depends on the outcome of conflicts in Syria and Iraq and on the political independence of Kurdistan. These countries contain much of the existing regional natural gas pipeline transmission capacity. Stabilization of those conflicts presents an opportunity for positive Russian engagement with Turkey and forms the basis for a recent trilateral accord signed in Kazakhstan between Russia, Turkey, and Iran aimed at ending the Syrian civil war; an agreement made possible by an expansion of the Russian military mission there. Turkey, with an intense interest in the political future of Kurdistan, plays a unique role by controlling access to many of the natural gas pipelines aimed at Europe. More importantly perhaps, Turkey is the southernmost outpost of NATO and hosts the important US military base at Incirlik.

The notable absence of the EU, the US, and the United Nations from the Kazakhstan talks reflects an important aspect of Russia’s strategy: limiting western—particularly US—influence in the region. Though Iran is an enthusiastic and powerful ally in this endeavor, strategy alone is not enough as the US has some very real ties to the region. American bases in Turkey, Iraq, Kuwait, Bahrain, and Qatar form a defensive network that bolsters the political stability of many of Iran’s rivals; not the least of which are Israel and Saudi Arabia. As mentioned, Turkey’s own security is still based largely on NATO, and most of the Gulf Emirates are completely dependent on American hard power for their defense. Given robust and longstanding support for this political-military structure in Washington, it is not surprising that Russia and Iran are exacerbating tensions between all of America’s allies in the region, particularly Qatar and Saudi Arabia.

Russia and Iran are the unseen beneficiaries of fractured relations between the two important US allies. Saudi Arabia’s main regional rival, Iran, is hardly an ally of Qatar, though enduring cultural links exist between the two states that can form a basis for renewed affinity. There is evidence Russia is encouraging an economic tie as well through business deals between Rosneft, the integrated oil company controlled by Moscow, and the Qatar Investment Authority (QIA). It is here, where Russian, Iranian, and Qatari interests converge, that the possibility of a joint pipeline project begins to make sense.

Russia Gas Cartel
The eventual route from the Persian Gulf South Pars/North Dome gas field (red region, bottom right) to Turkey is of strategic importance in the Middle East. Photo credit: https://www.loc.gov/resource/g7421h.ct002142/ (pipeline routes added by Chris Golightly)

Overland transport of gas reserves from Qatar’s North Dome gas field will converge at the existing terminal in Ceyhan, Turkey, but could take several different paths. While Russia prefers a pipeline (IGAT-IX, above in black) along the Iran-Iraq border, the US backs a route that transits Saudi Arabia, Jordan, and possibly Israel and Syria. Whatever the eventual route, stability in Syria is vital for security of the entire coastal strip. Achievement of the Russian design depends upon three key elements: politically isolating the United States, fracturing its allies, and stabilizing the Syrian conflict on terms that are favorable to the Kremlin.

Though Russia clearly hopes to position itself as the lynchpin in the arrangement, neither Moscow nor Tehran possess the technology required to construct IGAT-IX or the high-end LNG export facilities required at its terminus. For that they require easing of western sanctions that currently prohibit US or European oil companies such as Exxon-Mobil from sharing technology. The framework for this collaboration already exists. In August 2011, Russian President Putin, and the Executive Chairman of Rosneft, Igor Sechin, met Rex Tillerson in Sochi when he was still CEO of Exxon-Mobil. There, the three signed co-operation agreements for ten joint ventures, including drilling projects in the Russian Arctic, exploration in the Black Sea, a joint Arctic research center, and substantial options for Rosneft to invest in projects in the Gulf of Mexico and Texas. Consequently between 2011 and 2013, Exxon-Mobil became the partner of choice for Rosneft and now puts Russia and Iran high on the priority list for exploration. The reciprocal cooperation and the elevation of Tillerson to Secretary of State increases the expectation that sanctions will eventually be lifted, or at least not increased. Already, the bill for increased sanctions against Russia, which includes prohibitions against certain dealings with its oil and gas industry, is hung up in the House of Representatives due in no small part to efforts by the US oil lobby.

The Cost of Inaction

The prospect of Russia and Iran controlling 60% of the world’s proven natural gas reserves aims right at the heart of European security. Addressing it will require energy-specific strategies that not only reduce demand through the use of renewable sources, but also political solutions that guarantee supply by stabilizing the Middle East. With European unity hamstrung by homegrown nationalist movements, and the United States distracted by an endless series of domestic political dramas, it is difficult for either to formulate such strategies for the long-term. While the West limits its efforts in the Middle East to defeating the Islamic State of Iraq and the Levant (ISIL), Russia and Iran are playing a much broader game that will ultimately be more effective.

The potential for a tightening of gas supply options is a sober call for Europe to overcome domestic distractions and concentrate on a comprehensive energy security strategy; one that incorporates development and commercialization of a suite of renewable energy technologies. This should include solar and offshore wind, advances in nuclear fusion, offshore methane gas exploration, and clean, dry fracking. Until Europe reduces its reliance on Russian gas and takes measures to ensure political stability in the Middle East, there will be a risk of unwanted influence from Moscow and continued uncertainty.


Chris Golightly is an Independent Consulting Engineer specializing in offshore renewable energy, based in Brussels. Prior to 2010 he worked in the Oil & Gas industry.

The Gate: Standoff Against Daesh

A quick look at the military situation in Syria reveals – even to the most casual observer – that al-Bab is an important place. The northeastern-most outpost of the crumbling Islamic State, al-Bab – Arabic for “the Gate” – is the literal and figurative gateway to the Daesh capital, Raqqa, and the lynchpin in the ongoing strategic struggle in Syria. Located just 25 km from besieged eastern Aleppo, the small town is surrounded on three sides by enemies of Daesh. The Russian-supported Syrian regime, the US-supported, Kurdish-led Syrian Democratic Front (SDF), and the Turkish Army are all within artillery range of al-Bab and all have conflicting reasons to covet its control.

Though this seems a dire tactical situation for the defenders, mutual strategic hostility between Daesh’s enemies keeps them from acting decisively in al-Bab. The Assad Regime is at the limit of its capabilities, even with Russian support. Turkey, despite the massive superiority its Army enjoys in the region, is wary of pushing too far into Syria lest it trigger a defensive response from Assad. Lastly, the SDF, which has advanced west in a thin strip along the Turkish border from Hassakeh to beyond Manbij, believes al-Bab is perhaps a bridge too far. Seizing it could trigger a Turkish assault, possibly bringing its military into direct conflict with Russian forces for a second time since the Turkish Air Force shot down a Russian fighter in November 2015. No one, not even the Kurds, thinks this tiny town of 2.5 square kilometers is worth a world war.

the-gate
The strategic centrality of al-Bab: “The Gate”.   Source: www.syriancivilwar.com

America in the Middle

The United States finds itself between a rock and a hard place. In northern Syria, this means Washington has to negotiate its way through the opposing objectives of its Turkish and Kurdish allies. The ultimate Kurdish aim is to unite its northern cantons into a contiguous state they call “Rojava.” An SDF seizure of al-Bab is a big step in that direction and could favorably influence the decision in Aleppo in a way that makes Rojava more likely. For this reason, some believe Ankara is withholding support for breaking the siege of Aleppo until the SDF withdraws east of the Euphrates River.

Believing Raqqa to be the Daesh center-of-gravity, the United States pushes its Kurdish allies to seize that city instead of al-Bab. Though the SDF is the only force capable of doing so, it is not clear how they would benefit from control of the Daesh capital. The city is overwhelmingly Sunni and would not welcome Kurdish rule. More importantly, Raqqa is out of the way and an assault on it would require SDF formations to turn their backs on their archenemy, Turkey. Though cultivating American support is normally a powerful multiplier, the Kurds have overestimated Washington’s loyalty before and it is increasingly clear the United States lacks influence in northern Syria. The Pentagon has no military options that do not involve the SDF and diplomacy with both Russia and Turkey is ineffective at the moment for reasons that have nothing to do with Syria. Some suggest the Kurds want to use Raqqa as a bargaining chip for other concessions, though none of the other stakeholders are currently in a position to maintain control of the city even if they were to acquire it this way.

Wrath of the Euphrates
SDF Spokeswoman, Jihan Sheik Ahmed, announces commencement of Operation Wrath of the Euphrates, the Kurdish-led operation to isolate Raqqa. It is not clear what benefit the SDF will derive from seizing Raqqa.

For its part, Turkey is vehemently opposed to the Rojava that would put Kurdish factions in control of Turkey’s entire southern border from Iran to Idlib. The only way for Turkey to stop further Kurdish advances however is with direct military intervention into neighboring states. Turkey did exactly this on August 24th 2016, when its Army seized Jarabulus on the pretext of ousting Daesh from its border. With this accomplished, the veil is now wearing thin. Turkish units and their proxies are in increasingly frequent and intensifying conflict with the SDF, placing Turkey in the uncomfortable position of fighting an American ally that happens to be the only force actually conducting offensive operations against Daesh in the upper Euphrates valley.

Worse for Turkey, there is mounting evidence its Army is seriously underperforming in the field. The highly centralized decision-making and leadership culture of the Turkish military, a serious weakness under normal circumstances, has been compounded by the ongoing purge of its officer corps. Following the abortive 15 July coup attempt, 38% of Turkey’s generals and admirals, and 8% of other ranks have been jailed or relieved. Those remaining are averse to making any recommendation that may be perceived as disloyal, even at the expense of sound military advice. Though it is unknown how much of their hesitation is self-censorship, officers down to the rank of Major continue to have their careers and livelihoods terminated without warning, even while serving in front line combat roles. This erosion of leadership results in poorly coordinated operations, slow and predictable movements, and an inability to respond effectively to frequent instances of troops in contact. The otherwise well-trained and equipped Turkish Army is losing its tactical engagements and suffering unexpectedly high casualties.

Russia and the Regime

By contrast, the Assad Regime has shown remarkable resilience throughout the terrible Syrian civil war. Though some of its longevity is due to Iranian, and later Russian support, its diplomatic efforts have yielded fruit. Despite systematic violations of human rights and the law of armed conflict, the Regime remains the internationally-recognized government of Syria. Its complex relations with a number of western powers divide the US-led Coalition on the questions of military purpose and Syria’s political future.

Russia’s intervention has also improved Assad’s military situation, though not decisively. The Syrian Army’s stranglehold on Aleppo is tenuous at best and its supply lines from Damascus to Alawite strongholds in the north remain threatened by a kaleidoscopic patchwork of hostile territory around Homs and Hama. The siege of Aleppo is completely dependent upon brutal Russian air power and Turkish restraint of its proxies in the surrounding Governorates, particularly Idlib. Meanwhile in the south and in rural Damascus, the best the Regime can hope to achieve is an economy-of-force operation that might allow it to co-opt one rebellious village at a time.

Still, Damascus – and probably Moscow – will respond vigorously to any Turkish or Kurdish moves on al-Bab. Failing to do so would dangerously weaken the already fragile encirclement of Aleppo and threaten the supply lines of Syrian forces there – the besiegers could become the besieged. Even if the Syrian Army – and the presence of Russian “advisors” – fails to deter a Turkish seizure of al-Bab, Assad still has one more card to play: he is the only one that can deliver success to the Kurds. A Syrian deal with General Masloum’s SDF, granting a contiguous and autonomous Rojava in exchange for flank security for the siege of Aleppo, is a significant deterrent threat to Turkey.

Daesh Standoff

So the game continues to swirl around al-Bab as Daesh waits patiently in the relative comfort of stalemate. With each side holding a trump card over the other, there is no sign the situation will be decided soon, though recent Kurdish moves suggest dialogue is ongoing. On 6 November, SDF spokesmen announced the commencement of the isolation of Raqqa, an operation they call “Wrath of the Euphrates”. Ten days later, in what is widely seen as a US-brokered deal to enable an SDF seizure of Raqqa without Turkish interference, the SDF announced it would withdraw east of the Euphrates, vacating the hard won districts of Qebasin (eastern al-Bab) and Manbij. There is some risk the Kurdish departure will leave a power vacuum to be filled by either the Turkish Army or by a number of competing “military councils” with varying degrees of legitimacy. However, as recently as 22 November, perhaps in recognition of these risks, the SDF was still in control of Manbij and continued to exchange fire with Turkish forces to its west.

The coming months will reveal how all these maneuvers play out. The SDF and its Coalition Special Operations advisors are not yet ready for the final assault on Raqqa. To be successful, Operation Wrath of the Euphrates will require large numbers of Arab fighters currently wary of following a Kurdish general. In this respect, recruiting for the SDF’s Arab component is dependent upon events in Mosul 530 km to the east. A quick decision there will encourage Arabs to turn on Daesh and join General Masloum. By extension, this will affect al-Bab and the siege of Aleppo. For the time being however, the question of al-Bab will remain unanswered as the Kurds march on Raqqa, leaving the Turks to either make good on promises to fight Daesh in earnest or just stay out of the way. In any case, until at least one of the players acts decisively, there will continue to be a strategic standoff at “The Gate”.


Lino Miani

Lino Miani is a retired US Army Special Forces officer, author of The Sulu Arms Market, and CEO of Navisio Global LLC. He just completed an advisory tour with Combined Joint Task Force-Operation Inherent Resolve. 

Stealth Wealth: ISIL and the Myth of Oil

The Islamic State of Iraq and the Levant (ISIL) has established itself as an extremely powerful jihadist army in the heart of the Middle East. The group is well armed, commanding a vehicle fleet that includes 2300 High Mobility Multipurpose Wheeled Vehicles (HMMWV) and countless others along with enough weaponry and soldiers to manage a “state” of 300,000 square kilometers (roughly the size of Italy). ISIL is not just powerful, it is well funded. The group is reportedly so wealthy some members of the United States Government, without any apparent fear of hyperbole, repeatedly describe ISIL as the “best funded terrorist group in history” with oil as its main source of affluence.

The narrative is an attractive one. A wealthy terrorist group is novel and alarming. Fighting it requires new methods, new powers, and indeed new budgets. But it seems infeasible for the so-called Islamic State to accumulate wealth by selling functionally useless crude oil or poorly-refined petroleum products a truckload at a time. Survival alone must be very expensive indeed while under constant armed assault by a US-led coalition of 65 countries, along with Syria, Russia (arguably), Iran, and countless rival groups including the very capable Hezbollah. This gives credence to reports that some Sunni Arab states (allies of the United States) look the other way while their prominent citizens support the group.  Whatever the case, the mainstream media seems unwilling to question the narrative of ISIL’s oil riches.  The numbers however, do not support this idea.

Unbalancing the Books

Estimating ISIL’s oil revenue is complex and based largely on assumptions and derived intelligence but is useful for making the point that the group will have great difficulty profiting from the sale of stolen petroleum.

A generous estimate put ISIL’s February 2015 production capacity at 50,000 barrels per day (bpd). With a market price of $10 a barrel according to one Iraqi official, ISIL could theoretically make $15 million a month. But there is more to the story. ISIL does not control a single pipeline from origin to destination meaning they require 181 standard tanker trucks just to move all that oil, a very inefficient and expensive transportation method. Standard trucks of this type would require roughly four barrels of diesel just to make the 800-mile round trip from Kirkuk to Raqqah. That is 724 barrels per day ($217,000 per month) just to deliver to potential customers.

But ISIL needs fuel as well. A large percentage of ISIL’s estimated production would be consumed by 2300 HMMWVs, hundreds of armored vehicles, likely tens of thousands of civilian cars and trucks, heavy machinery for construction and survivability, generators, and heaters. With only about 70% of refined petroleum products useful for those purposes, ISIL’s for-sale inventory is down to somewhere in the neighborhood of 30,000 bpd. Subtract another 10% for likely corruption, loss, fuel contamination due to mishandling, and inefficiencies from distributed and improvised refining, that is 27,000 bpd before accounting for a single action by any of ISIL’s many enemies.

The Myth of ISIL's Oil
“Crude Stills:” A field refinery used by ISIL to process crude oil into useable forms such as diesel and kerosene.

All the same, 27,000 bpd is worth $8.1 million per month; not a paltry sum, but a far cry from the $50 million bonanza the United States estimates ISIL earns monthly from oil sales. It is also only one half of the equation. Though ISIL’s monthly expenditure is beyond the scope of this article, we must remember that its army of tens of thousands of soldiers is a very expensive commodity to operate. Those soldiers must be recruited, fed, paid, housed, equipped, armed, and trained. The wounded require expensive medicines to heal or keep healthy and their families must be compensated upon their deaths. If we compare these priorities with appropriation titles in the budget of the United States Army, we find that similar expenses account for 91.8% of the total US Army budget. Assuming ISIL has similar combat priorities, it is clear $8.1 million will not go very far.

Groupthink, Bureaucracy, and Confusion

If strained production capacity, distributed and inefficient refining, expensive distribution infrastructure, extremely high operating costs, and a questionable customer base are not enough to break ISIL’s bank, enemy action certainly will.  Unfortunately, there is a political rUntitledeason we keep hearing tales of the group’s fabulous riches. Since the Obama Administration began perpetuating the myth of ISIL’s oil wealth in August 2014, bureaucrats and generals have used the idea as a foundation for action. As early as September 2014, the Department of the Treasury sought authorities to target ISIL’s bank accounts and those of its financial backers while the State Department lobbied to block donations to ISIL from  citizens of Gulf Cooperation Council countries. Meanwhile, the Pentagon went after the group’s oil infrastructure, most notably in an effort to retake the Bayji refinery complex. Though this seems a refreshingly comprehensive approach to a complex problem, these agencies carried it out in the context of bureaucratic competition, particularly when diplomacy constrained military options or when bombing annoyed regional allies and complicated negotiations over the Iran nuclear deal. Yet amid the bureaucratic maneuvering, none were willing to question the attractive but invalid assertion that ISIL was making a lot of money…Until Vladimir Putin agreed with them.

Following the downing of a Russian fighter aircraft by the Turkish Air Force, Russia produced photo evidence accusing Turkey of being the primary consumer of ISIL’s stolen oil.  The Russian photos even implicated the family of Turkish President Recep Tayyip Erdogan in the trade. Despite their ambiguity, the allegations are troublesome for the mantra underpinning the policies of the United States, NATO, Turkey, and a number of other outwardly anti-ISIL stakeholders. The response from the United States came from special envoy and coordinator for international energy affairs, Amos Hochstein, who said that ISIL’s oil sales to Turkey are of “no significance from a volume [or revenue] perspective” and that most consumers are in ISIL-controlled areas of Syria and Iraq. Bizarrely, other US officials even questioned ISIL’s production capacity, pointing out that the group refines its stolen oil in “ad hoc desert pits equipped with crude stills”. Suddenly Washington was further complicating an already confusing policy by qualifying its previously bold statements about ISIL’s oil wealth.

The Cost of the Myth

Maintaining the myth of ISIL oil wealth was always an operational liability, incorrectly informing policy and improperly shaping decisions on the use of national power. It is now clear the tortured logic required to maintain the fiction is an international political liability as well and it is time for the United States and its allies to face facts and abandon the groupthink. ISIL is not enjoying a massive windfall from the sale of oil and instead is waging a successful war with more intractable sources of funding including possible covert sponsorship from some of America’s less scrupulous Sunni allies. Until Washington is willing to face the reality of ISIL’s oil wealth, those “allies” will enjoy political cover to support the Islamic State and Mr. Putin will continue to use America’s own rhetoric against it.

Lino Miani

Lino Miani is a retired US Army Special Forces officer, author of The Sulu Arms Market, and CEO of Navisio Global LLC