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Putin’s Shadow Warriors Stake Claim to Syria’s Oil

Companies linked to the Wagner group are snapping up oil and gas leases—with an eye to pumping influence, not oil.

By , a national security and intelligence reporter at Foreign Policy.
Yevgeny Prigozhin shows Vladimir Putin his school lunch factory.
Businessman Yevgeny Prigozhin shows then-Russian Prime Minister Vladimir Putin his school lunch factory outside St. Petersburg, Russia, on Sept. 20, 2010. Alexey Druzhinin/Sputnik/AFP via Getty Images

A Russian company that recently struck a deal with the Syrian government for offshore oil and gas exploration is part of a network of companies that make up the shadowy Russian mercenary group known as Wagner, which has played a pivotal role in Moscow’s destabilizing activities around the world, according to emails and company records seen by Foreign Policy. 

The deal with the previously unknown Russian company Kapital, which was ratified by Syrian President Bashar al-Assad in March, will theoretically see the Russian company explore for oil and gas in a 2,250-square-kilometer area off the coast of southern Syria. It threatens to cause a dispute with neighboring Lebanon, which has argued the area includes some of its waters. 

The deal comes as Moscow seeks to entrench its strategic foothold in Syria and, by extension, further expand its reach in the Eastern Mediterranean. It also underscores how Moscow continues to outsource its trickier foreign-policy objectives to private military contractors who offer a low-risk and versatile means of intervening around the globe while maintaining a thin veneer of plausible deniability. Best known for their mercenary activity, which spans the world from Sudan to Ukraine to Venezuela, Wagner operatives have also sought to exploit lucrative natural resource reserves in fragile states. 

A Russian company that recently struck a deal with the Syrian government for offshore oil and gas exploration is part of a network of companies that make up the shadowy Russian mercenary group known as Wagner, which has played a pivotal role in Moscow’s destabilizing activities around the world, according to emails and company records seen by Foreign Policy. 

The deal with the previously unknown Russian company Kapital, which was ratified by Syrian President Bashar al-Assad in March, will theoretically see the Russian company explore for oil and gas in a 2,250-square-kilometer area off the coast of southern Syria. It threatens to cause a dispute with neighboring Lebanon, which has argued the area includes some of its waters. 

The deal comes as Moscow seeks to entrench its strategic foothold in Syria and, by extension, further expand its reach in the Eastern Mediterranean. It also underscores how Moscow continues to outsource its trickier foreign-policy objectives to private military contractors who offer a low-risk and versatile means of intervening around the globe while maintaining a thin veneer of plausible deniability. Best known for their mercenary activity, which spans the world from Sudan to Ukraine to Venezuela, Wagner operatives have also sought to exploit lucrative natural resource reserves in fragile states. 

“The challenge we have now is that Russian private military security contractors are going to be a permanent fixture on the landscape of Middle East and African oil and gas development for a time to come,” said Candace Rondeaux, a senior fellow and professor of practice at the Center on the Future of War, a joint initiative of New America and Arizona State University.

Russia’s most notorious private military contractor, an opaque collection of companies collectively referred to as the Wagner group, is reportedly spearheaded by close Russian President Vladimir Putin ally Yevgeny Prigozhin, who has been sanctioned by the United States for attempting to interfere in the 2016 U.S. presidential election and 2018 U.S. midterm elections. Now, his network appears to be meddling in Syria’s future. 

Leaked emails obtained by the Dossier Center, a London-based investigative unit funded by the exiled Russian oligarch Mikhail Khodorkovsky, and analyzed by the nonprofit Center for Advanced Defense Studies show an overlap in ownership structures between Kapital and other known Wagner affiliates operating in Syria. The general manager named in Kapital’s contract with the Syrian government, Igor Viktorovich Khodyrev, is listed as the head geologist in an internal work schedule used by Evropolis, another Wagner-affiliated company, which earlier struck a deal with the Syrian government that awarded it 25 percent share of oil and gas field revenues liberated from Islamic State control. 

Internal Evropolis emails also include company records pertaining to Kapital and its sole shareholder, which would indicate an overlap in operations. A spokesperson for Prigozhin did not respond to a request for comment, and the catering magnate has previously denied any connection to mercenary activities. Khodyrev could not be reached for comment. 

Evropolis made headlines after a group of men working for the company was accused of being responsible for the brutal torture and murder of a Syrian man, Hamdi Bouta, which was captured on video at the al-Shaer gas plant near Palmyra, Syria, in 2017. In the first lawsuit of its kind, the victim’s brother filed a complaint in Russian courts in March accusing the Wagner group of war crimes. In Libya, U.S. Africa Command has accused Wagner operatives of “indiscriminately placed booby traps and minefields,” and in the Central African Republic, they have been accused of torture, arbitrary detention, and mass executions. 

“The question is: How do we get to grips with a group of actors that have a clear pattern of violating human rights in lots of places, and what does that mean in the long term for the political stability of places like Syria, Libya, Sudan, and the Central African Republic?” Rondeaux said. 

At least two other companies reportedly connected to Wagner have struck oil and gas deals with the Syrian government. In late 2019, the Syrian parliament approved contracts for the exploration and development of three onshore blocks, each believed to contain 250 billion cubic meters of gas. The Russian investigative newspaper Novaya Gazeta later reported the companies Mercury and Velada had long-standing ties to Prigozhin. The press service of Prigozhin’s catering company has denied the tycoon has any connection to the companies. 

Such contracts serve as a reward to mercenary groups that fought in obscurity alongside Syrian government forces in some of the war’s more grueling ground operations. Hundreds of Russian mercenaries are thought to have been killed in clashes with U.S. forces in 2018 after they attacked an outpost in Deir al-Zour province, where a small contingent of Kurdish and U.S. forces were operating. 

The apparent use of Wagner companies is indicative of the Kremlin’s strategy in Syria: Russia’s state-owned energy giants are not the ones being used to gain a toehold, said Anna Borshchevskaya, a senior fellow with the Washington Institute and an expert on Russia’s policy in the Middle East. “Smaller companies suggest they’re interested in a lighter footprint.”

The ventures by Kapital, Mercury, and Velada don’t make a whole lot of sense from an energy perspective—but they might in a geopolitical sense. Before war broke out in 2011, Syria was producing just under 400,000 barrels of oil a day, less than half of 1 percent of the global supply at the time. Since then, output has plummeted by more than 90 percent and is now estimated to be around 20,000 barrels a day, as much of the country’s most productive oil fields are in territories still controlled by the rebel Syrian Democratic Forces in the country’s northeast. Since Russia’s domestic oil companies pump more than 10 million barrels daily, Syria’s industry hardly seems worth the effort from a purely economic standpoint, said Karam Shaar, a nonresident scholar with the Middle East Institute and an expert on Syria’s economy. 

But Moscow sees Syria and its hydrocarbons industry as a means to maintain its leverage as the country looks toward reconstruction after a decade of conflict. “They do have the loyalty of Assad, but they do want to have things in writing,” Shaar said. “They know that whoever holds the oil in Syria will end up having … a very important negotiating card simply because of Syria’s tiny economy.”

Having a stronger foothold in Syria also helps Moscow with its long-standing goal of reestablishing its presence in the Eastern Mediterranean. Russia has long had close ties with Syria, which is home to Russian air and naval bases. Russia’s decision to intervene in the Syrian conflict in 2015 marked its return to the Middle East after having been largely absent since the collapse of the Soviet Union. Positioning itself as a loyal ally, Moscow has strengthened its relationships in the region as the United States has sought to step back. 

Syria has also been used as a launchpad to support Wagner operations in Libya, where the group has brought in Russian and Syrian mercenaries to fight in support of renegade Field Marshal Khalifa Haftar after he launched an offensive in 2019 to topple the internationally recognized government. In June 2020, fighters associated with Wagner seized control of two of Libya’s largest oil facilities, the Wall Street Journal reported. 

“If Russia has access in Syria together with Libya, that creates a strategic arc, which allows Russia to expand into Africa and expand into Europe from its southern flank,” Borshchevskaya said.

Operating in an accountability vacuum in some of the most fragile countries in the world like Sudan, the Central African Republic, and Libya, private contractors like the Wagner group have served as soldiers-for-hire and political strategists while simultaneously pursuing lucrative deals for natural resource exploitation. The U.S. Treasury is engaged in an ongoing game of whack-a-mole as it has sought to sanction entities linked to the group’s sprawling and ever-shifting network of companies. Although Wagner is closely entangled with the Russian state, the Kremlin has long denied any connection to the Wagner group.

Outgunned by the West both militarily and economically, Moscow has come to rely on so-called gray zone tactics, such cyberattacks and the use of the Wagner group, as cost-effective measures to advance its interests on the world stage. 

“They’re using tools that could potentially undermine our strategic position, but we won’t notice it because we’re unaware of the full scope of their activities,” Borshchevskaya said.

Amy Mackinnon is a national security and intelligence reporter at Foreign Policy. Twitter: @ak_mack

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