Coalition air strikes have not stopped the militant group from earning millions of dollars a week from its Iraqi oil operations
Erbil refinery in Khabat. Isis controls about half a dozen oilfields and
has tapped into trading networks across northern Iraq. Photograph:
Anadolu Agency/Getty Images
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Islamic State has consolidated its grip on oil supplies in Iraq and
now presides over a sophisticated smuggling empire with illegal exports
going to Turkey, Jordan and Iran, according to smugglers and Iraqi officials.
Six months after it grabbed vast swaths of territory, the radical
militant group is earning millions of dollars a week from its Iraqi oil
operations, the US says. Coalition air strikes against tankers and refineries controlled by Isis have merely dented – rather than halted – these exports, it adds.
The militants control around half a dozen oil-producing oilfields.
They were quickly able to make them operational and then tapped into
established trading networks across northern Iraq, where smuggling has
been a fact of life for years. From early July until late October, most
of this oil went to Iraqi Kurdistan. The self-proclaimed Islamic
caliphate sold oil to Kurdish traders at a major discount. From
Kurdistan, the oil was resold to Turkish and Iranian traders. These
profits helped Isis pay its burgeoning wages bill: $500 (£320) a month
for a fighter, and about $1,200 for a military commander.
The US has pressured Iraqi Kurdistan’s leaders to clamp down on
smuggling, with limited success. But oil is still finding its way to
Turkey via Syria, with Islamic State deftly switching from one market to
another, smugglers say, with cheap crude channelled to Jordan instead.
On Monday, a UN panel urged countries neighbouring Iraq and Syria to seize oil trucks that continue to flow out from jihadist-occupied territory.
“We buy an oil tanker carrying around 26 to 28 tonnes [of oil] for
$4,200. We sell it in Jordan for $15,000. Each smuggler takes around
eight tankers a week,” Sami Khalaf, an oil smuggler and former Iraqi
intelligence officer under Saddam Hussein, told the Guardian. Khalaf,
who lives in Jordan’s capital, Amman, said smugglers typically paid
corrupt border officials $650 to pass through each checkpoint.
Iraqi intelligence officials confirm that Isis uses Anbar province,
which shares a border with Jordan, as a major smuggling hub. Isis
controls three major oilfields in Iraq – Ajeel, north of Tikrit, Qayara, and Himrin.
Militants outside an oil refinery in Baiji, north of Baghdad. Isis was quick to make the oilfields it captured operational.Photograph: Uncredited/AP
One official, based in Kurdish-controlled Kirkuk, said 435 tonnes of
crude oil from the Ajeel oilfield in Salahuddin province was recently
transported to Anbar. From there it went to Amman. Iraq’s oil ministry
spokesman, Asim Jihad, said he was not aware of oil being smuggled to
Jordan, but conceded that Isis was still managing to export crude to Turkey via Syria. “We are pressing Turkey to stop this trade because it strengthens Isis,” Jihad said.
In June, US reconnaissance drones flying above northern Iraq
spotted large numbers of oil tankers crossing unhindered from Isis
areas into the Kurdistan region. At the time, Kurdish peshmerga fighters
were facing off against Isis on a new and fragile frontline. American
commanders presented Kurdish officials with satellite imagery and
pressured them to crack down. US planes destroyed seven tankers, with
Iraqi aircraft hitting similar targets last month.
“The middlemen, traders, refiners, transport companies, and anyone
else that handles [Isis’s] oil should know that we are hard at work
identifying them, and that we have tools at hand to stop them,” David
Cohen, the undersecretary for terrorism and financial intelligence at
the US treasury, warned. Last week, Cohen estimated the militants were
still earning “several million dollars per week from the sale of stolen
and smuggled energy resources” – down on what they pulled in before the
coalition air strikes, but still a substantial amount.
Before Isis captured them, the oil fields might produce 400,000 to
500,000 barrels of oil a day, according to an official in Iraq’s
state-run North Oil
Company, which oversaw all the fields in the area before the militants
took control. One trader said that at its height, 3,000 tonnes of crude
oil (25,350 barrels) a day were going to Kurdistan. From there the oil
vanished into Turkey and Iran.
Oil refinery in Beiji. Corrupt peshmerga commanders have facilitated the oil-smuggling from Isis territory.Photograph: AP
International scrutiny has restricted these volumes. But one Kurdish
parliamentarian admitted it hadn’t been shut down altogether. “I would
say the illegal trade has decreased by 50%. We have detained several
people who were involved in buying oil from Da’esh [Isis]. The same
people provided Isis with petrol and over 250 pick-up trucks,” Mahmoud
Haji Omar said. He added that even Shia militia fighting the extremists
had profited from the trade by taxing oil tankers passing through
territory they control.
Karim Hassan, a 47-year-old Sunni Arab truck driver identified an
Isis commander, Saud Zarqawi, as responsible for much of the trade.
Zarqawi had made a deal to smuggle the oil with Sunni tribal leaders and
other prominent individuals in the Mosul area, Hassan said. The leaders
reactivated existing networks with Kurdish traders who took the oil to
the autonomous region.
Hassan, who has transported oil for the past 13 years, said he was
astonished how quickly Isis had made these oilfields operational. When
he asked his contacts in the oil sector in Mosul, he was told that Isis
had brought in two oil engineers from Syria who managed to get the fields under its control up and running.
“Kurdish traders agreed to buy the oil for half of its international
price and paid $1,500 for each tanker to pass through the peshmerga
checkpoints in Kirkuk, Makhmour, Daquq and Tuz Khormato areas,” said
Hassan, who used to get $120 to $150 for transporting crude oil but was
paid as much as $300 for a round trip by people affiliated with Isis.
The oil was then resold to Turkish and Iranian traders.
Before Isis captured them, the oil fields might produce 400,000 to 500,000 barrels of oil a day.Photograph: Karim Sahib/AFP/Getty Images
While the overwhelming majority of Kurdish peshmerga are battling
Isis on a long frontline in northern Iraq, some corrupt commanders
within the force have facilitated the oil-smuggling from Isis territory.
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Ghafar, who has been transporting crude for the past seven years, said
he had loaded oil from the Isis-controlled area of Hemrin and taken it
to Qoshtapa – a district about 30km south of the Kurdish capital, Erbil,
where much of the smuggled oil appears to have been taken for refining.
“We did not stop at the Kurdish checkpoints because there was an
arrangement between the Kurdish traders and the head of the
checkpoints,” Ghafar said.
Kurdish regional government officials claim they have detained
several individuals who dealt in the oil coming from Isis and are
working with American officials to put a stop to the trade. Ahmad
Askari, a member of the security committee of the Kirkuk provincial
council, said those who had bought oil from Isis would be charged under
the anti-terror law, punishable by death.
A security official in south of Kirkuk who requested anonymity said
as far as he knew his superiors had not taken any action against Kurds
involved in the trade initially because they didn’t want to tarnish the
image of the peshmerga.
Ghafar said that for the past month the route he used to buy and
transport Isis oil had been closed because of the US bombing.
Checkpoints had also applied tighter controls, he said. The air strikes
in Iraq and Syria on oil refineries and crackdown on crude oil smuggling
has led to price rises for fuel and petrol in Mosul, which poses
serious challenges for the Islamic militant group to rule its biggest
urban centre. “There are trucks and oil tankers parked by the side of
every road in Mosul selling all kinds of gasoline: black, red, white and
yellow gasoline with very low quality,” said a resident of Mosul.
When asked if many within the smuggling network have been arrested,
the Kurdish oil trader replied: “Small fish always get caught. But the
big fish always escape.”
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