Is ISIL running out of oil?
Fighters may lost Iraq’s Beiji refinery, but they still control a number of oil wells and continue to exploit them.
It has been alleged that the Islamic State of Iraq and the Levant (ISIL) has made millions in Iraq, smuggling oil from various sites that they control around the country. According to the US, the figures could run into millions of dollars a week.
While it is true that ISIL had control of Iraq’s largest oil refinery, Beiji, until recently, it also controls a number of oil wells and continues to exploit them.
When ISIL fighters arrived in June 2014, they found themselves in possession of rich oil wells in Nineveh province, south of Mosul.
This allowed them to establish smuggling operations, following criminal routes long established and join them up with smuggling routes in Syria. A common route came into being.
Husham al-Brifkani, the head of the energy committee of Nineveh’s provincial council, said: “ISIL would smuggle oil by trucks through Syria and other neighbouring countries.
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“They would then find willing middlemen who sold to the merchants. They sold around 10,000 barrels a day using this method.”
However, it was not just fields near Mosul, but others they exploited as well using the same route.
Iraqi sources inside the country’s oil ministry told Al Jazeera on condition of anonymity, because they are not authorised to talk on the subject, that ISIL sold the oil at a huge discount.
“ISIL get around $10 a barrel for the oil that they sell. The merchants won’t pay more than that,” said one of the sources.
Peshmerga sources also confirmed the routes used. According to them, “the only successful route used by ISIL to smuggle out oil is through Syria. From Mosul on to Raqqa in Syria, then Ayntab [Arabic name for Gazientep city] in Turkey.”
But Iraqi security forces have managed to disrupt ISIL oil operations and retaken key sites in Nineveh and Salahuddin province back from ISIL, which has significantly degraded the group’s ability to profit from the black gold.
“ISIL used to sell 10,000 barrels a day. We now know that has been reduced to 2,000 barrels a day mainly through the Syria-Turkey route,” said Brifkani.
After operations in Tikrit by Iraqi security forces that liberated the city, ISIL oil took a hit once again. More routes into Syria were lost by the group as well as access to middlemen.
Since the beginning of the year, ISIL has also come under a significant pressure in other places, including the north of the country.
There, US-led coalition air strikes, Peshmerga operations and Iraqi security forces have managed to reduce the number of trucks leaving Mosul, which acts as a staging hub for some ISIL oil operations.
Peshmerga sources say that the trucks leaving Mosul are down from hundreds to dozens.
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Turkish smugglers, however, remain an issue. Turkey does not have any natural resources of its own and relies on exports.
The Iraqi Kurdish authority is a key trading partner for the Turks and supplies a lot of oil. But for unscrupulous middlemen, Turkey’s desire for oil provides them with an opportunity.
When trucks arrive in Turkey, the fuel is dumped into pipelines that service illegal filling stations and legal petrol stations.
Turkey has said it has cracked down on this trade but, according the Iraqi oil ministry sources, it remains a favoured destination.
Syrian oil is also a problem as ISIL face less resistance in that country and so the smuggling continues both within the country and outside it.
Reports in the media in recent months suggest that the Syrian government buys oil from smugglers from fields outside of their control.
If that is true, it means in effect President Bashar al-Assad is buying oil from ISIL and indirectly funding the war against himself.
Iraq, though, has had significant success in taking down ISIL’S smuggling operation, and this has meant that revenues for the group from oil have dropped to a level not seen before.
However, even conservative estimates suggest that the trade could still be worth $250,000 a day.
Iraq has also used legal means to try and stop individuals trading oil with ISIL by introducing charges under the country’s anti-terrorism laws some of which carry the death sentence.
As long as there is demand for oil and a supplier, though – ISIL or otherwise – there will be a buyer.
For now the only consolation Iraq has is that ISIL’s access to oil is being cut off, a fact that might not make the group immediately weak due to their taxation and other sources of revenue, but will in the long term have an effect.