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$500M a year in oil revenue buoys Islamic State fighters |

$500M a year in oil revenue buoys Islamic State fighters

The Associated Press
| Saturday, October 24, 2015 11:51 a.m
Iraqi security forces and allied Popular Mobilization Forces search for Islamic State fighters at Beiji oil refinery, north of Baghdad, Iraq, Friday, Oct. 23, 2015.

BAGHDAD — The Islamic State group rakes in up to $50 million a month from selling crude from oilfields under its control in Iraq and Syria, part of a well-run industry that diplomacy and airstrikes have failed to shut down, according to Iraqi intelligence and U.S. officials.

Oil sales, the extremists’ largest single source of continual income, are a key reason they have been able to maintain their rule over their self-declared “caliphate” stretching across large parts of Syria and Iraq. With the funds to rebuild infrastructure and provide the largesse that shores up its fighters’ loyalty, it has been able to withstand ground fighting against its opponents and more than a year of bombardment in the U.S.-led air campaign.

The group has even been able to bring in equipment and technical experts from abroad to keep the industry running, and the United States has recently stepped up efforts to close off this support.

Washington has been talking to regional governments, including Turkey, about its concerns over the importing of energy infrastructure into ISIS-run territory in Syria, including equipment for extraction, refinement, transport and energy production, according to a senior American official with firsthand knowledge of the ISIS oil sector.

Speaking to The Associated Press in Washington, he said international actors in the region were intentionally or unintentionally aiding this effort and called ISIS’ management of its oilfields “increasingly sophisticated,” something that has helped the group slow the degradation of its infrastructure from U.S. bombing raids. He spoke on condition of anonymity because he was not authorized to talk to the press.

ISIS sells the crude to smugglers for discounted prices, sometimes $35 per barrel but as low as $10 a barrel in some cases, compared to just under $50 a barrel on international markets, four Iraqi intelligence officials told the AP in separate interviews. The smugglers in turn sell to middlemen in Turkey, they said. The oil used to be smuggled in fleets of giant tankers, but fearing airstrikes by the U.S.-led coalition, smaller tankers are being used. The Iraqi officials spoke on condition of anonymity because they were not authorized to brief the press.

The Islamic State group is believed to be extracting about 30,000 barrels per day from Syria, smuggled to middlemen in neighboring Turkey. In Iraq, they produce around 10,000 to 20,000 barrels per day, mostly from two oilfields outside Mosul, said Ibrahim Bahr al-Oloum, a member of Iraq’s parliamentary energy committee and a former oil minister. But he said much of the Iraqi production is not sold and is instead sent to Syria to makeshift refineries the group has set up to produce fuel products.

In total, the group is believed to make $40 million to $50 million a month from sales, the Iraqi officials said. A report by the Islamic State’s Diwan al-Rakaaez — its version of a finance ministry — seen by the AP in Baghdad shows that revenues from oil sales from Syria in April totaled $46.7 million. The ISIS “finance ministry” report put at 253 the number of oil wells under ISIS control in Syria, saying 161 of them were operational. Running the wells were 275 engineers and 1,107 workers, it said.

Turkey’s prime minister’s office said in a statement to the AP that it has taken steps to tighten border security and “has effectively stopped oil smuggling” across the border. It said that as of the end of September it had prevented 3,319 acts of smuggling from Syria and that since 2011 it seized more than 5.5 million liters of oil in anti-smuggling operations. It did not comment on American efforts to stop oil equipment and experts from entering Syria from Turkey.

Daniel Glaser, a U.S. Treasury official, estimated ISIS oil revenues at around $500 million a year, based on evidence they made around $40 million in one month in early 2015. The group is believed to rake in hundreds of millions of dollars a year from “taxes” on commercial activities in the areas it rules, said Glaser, who is assistant Treasury secretary for terrorist financing in the Office of Terrorism and Financial Intelligence.

That income is on top of the money that the terrorists looted from the Iraqi central bank branch in the city of Mosul when they seized it in the summer of 2014 and other bank branches, which “at the time was thought to be anywhere between $500 million to up to $1 billion,” Glaser told the AP.

The campaign of Russian airstrikes in Syria that began last month has not hit ISIS oil infrastructure, though the nearly year-old U.S.-led air campaign has on occasion. In Iraq, airstrikes and ground offensives have had a greater effect in grinding down the oil industry.

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