(Pictured left: The Islamic State group’s oil earns the ‘caliphate’
$19 million a month through international markets [source: al-Araby] GR Editor’s Note: Some of the details of this report are fully corroborated. Oil produced by the Islamic State group finances its bloodlust.
But how is it extracted, transported and sold? Who is buying it, and how
does it reach Israel? Oil produced from fields under the control of the Islamic State
group is at the heart of a new investigation by al-Araby al-Jadeed. The
black gold is extracted, transported and sold, providing the armed group
with a vital financial lifeline. But who buys it? Who finances the murderous brutality that has
taken over swathes of Iraq and Syria? How does it get from the ground to
the petrol tank, and who profits along the way?
The Islamic State group uses millions of dollars in oil revenues to
expand and manage vast areas under its control, home to around five
IS sells Iraqi and Syrian oil for a very low price to Kurdish and
Turkish smuggling networks and mafias, who label it and sell it on as
barrels from the Kurdistan Regional Government.
It is then most frequently transported from Turkey to Israel, via
knowing or unknowing middlemen, according to al-Araby’s investigation.
The Islamic State group has told al-Araby that it did not
intentionally sell oil to Israel, blaming agents along the route to
All around IS-controlled oil fields in northern Iraq and eastern Syria,
there are signs that read: “Photography is strictly forbidden –
violators risk their safety.” They have been signed in the name of the
These oil fields are in production between seven and nine hours a
day, from sunset to sunrise, while production is mostly supervised by
the Iraqi workers and engineers who had previously been running
operations, kept on in their jobs by IS after it captured the territory.
IS is heavily dependent on its oil revenues. Its other income, such
as from donations and kidnap ransoms has slowly dwindled. Workers in IS
oil fields and their families are well looked after, because they are
very important to the group’s financial survival.
IS oil extraction capacity developed further in 2015 when it obtained
hydraulic machines and electric pumps after taking control of the Allas
and Ajeel oil fields near the Iraqi city of Tikrit.
The group also seized the equipment of a small Asian oil company that
was developing an oil field close to the Iraqi city of Mosul before IS
overran the area last June.
IS oil production in Syria is focused on the Conoco and al-Taim oil
fields, west and northwest of Deir Ezzor, while in Iraq the group uses
al-Najma and al-Qayara fields near Mosul. A number of smaller fields in
both Iraq and Syria are used by the group for local energy needs.
According to estimates based on the number of oil tankers that leave Iraq, in addition to al-Araby‘s
sources in the Turkish town of Sirnak on the border with Iraq, through
which smuggled oil transits, IS is producing an average of 30,000
barrels a day from the Iraqi and Syrian oil fields it controls.
The export trek
Al-Araby has obtained information about how IS smuggles oil from a
colonel in the Iraqi Intelligence Services who we are keeping anonymous
for his security.
The information was verified by Kurdish security officials, employees
at the Ibrahim Khalil border crossing between Turkey and Iraqi
Kurdistan, and an official at one of three oil companies that deal in
The Iraqi colonel, who along with US investigators is working on a way to stop terrorist finance streams, told al-Araby
about the stages that the smuggled oil goes through from the points of
extraction in Iraqi oil fields to its destination – notably including
the port of Ashdod, Israel.
“After the oil is extracted and loaded, the oil tankers leave Nineveh
province and head north to the city of Zakho, 88km north of Mosul,” the
colonel said. Zakho is a Kurdish city in Iraqi Kurdistan, right on the
border with Turkey.
“After IS oil lorries arrive in Zakho – normally 70 to 100 of them at
a time – they are met by oil smuggling mafias, a mix of Syrian and
Iraqi Kurds, in addition to some Turks and Iranians,” the colonel
“The person in charge of the oil shipment sells the oil to the
highest bidder,” the colonel added. Competition between organised gangs
has reached fever pitch, and the assassination of mafia leaders has
The highest bidder pays between 10 and 25 percent of the oil’s value
in cash – US dollars – and the remainder is paid later, according to the
The drivers hand over their vehicles to other drivers who carry
permits and papers to cross the border into Turkey with the shipment,
the Iraqi intelligence officer said. The original drivers are given
empty lorries to drive back to IS-controlled areas.
According to the colonel, these transactions usually take place in a
variety of locations on the outskirts of Zakho. The locations are agreed
Before crossing any borders, the mafias transfer the crude oil to
privately owned rudimentary refineries, where the oil is heated and
again loaded onto lorries to transfer them across the Ibrahim Khalil
border crossing into Turkey.
The rudimentary refining, according to the colonel, is performed
because Turkish authorities do not allow crude oil to cross the border
if it is not licensed by the Iraqi government.
The initial refining stage is conducted to obtain documents that
would pass the oil off as oil by-products, which are allowed through the
According to the intelligence officer, border officials receive large
bribes from local Iraqi smuggling gangs and privately owned refineries.
Once in Turkey, the lorries continue to the town of Silopi, where the
oil is delivered to a person who goes by the aliases of Dr Farid, Hajji
Farid and Uncle Farid.
Uncle Farid is an Israeli-Greek dual national in his fifties. He is
usually accompanied by two strong-built men in a black Jeep Cherokee.
Because of the risk involved in taking a photo of Uncle Farid, a
representative drawing was made of him.
Once inside Turkey, IS oil is indistinguishable from oil sold by the
Kurdistan Regional Government, as both are sold as “illegal”, “source
unknown” or “unlicensed” oil.
The companies that buy the KRG oil also buy IS-smuggled oil, according to the colonel. The route to Israel
After paying drivers, middlemen and bribes, IS’ profit is $15 to $18 a
barrel. The group currently makes $19 million on average each month,
according to the intelligence officer.
Uncle Farid owns a licensed import-export business that he uses to
broker deals between the smuggling mafias that buy IS oil and the three
oil companies that export the oil to Israel. Al-Araby has the names of these companies and details of
their illegal trades. One of these companies is also supported by a very
high-profile Western official.
The companies compete to buy the smuggled oil and then transfer it to
Israel through the Turkish ports of Mersin, Dortyol and Ceyhan,
according to the colonel.
Al-Araby has discovered several brokers who work in the same
business as Uncle Farid – but he remains the most influential and
effective broker when it comes to marketing smuggled oil.
A paper written
by marine engineers George Kioukstsolou and Dr Alec D Coutroubis at the
University of Greenwich tracked the oil trade through Ceyhan port, and
found some correlation between IS military successes and spikes in the
oil output at the port.
In August, the Financial Times reported that Israel obtained
up to 75 percent of its oil supplies from Iraqi Kurdistan. More than a
third of such exports go through the port of Ceyhan, which the FT
authors describe as a “potential gateway for IS-smuggled crude”.
Kioukstsolou told al-Araby al-Jadeed that this suggests
corruption by middlemen and those at the lower end of the trade
hierarchy – rather than institutional abuse by multinational businesses
According to a European official at an international oil company who met with al-Araby
in a Gulf capital, Israel refines the oil only “once or twice” because
it does not have advanced refineries. It exports the oil to
Mediterranean countries – where the oil “gains a semi-legitimate status”
– for $30 to $35 a barrel.
“The oil is sold within a day or two to a number of private
companies, while the majority goes to an Italian refinery owned by one
of the largest shareholders in an Italian football club [name removed]
where the oil is refined and used locally,” added the European oil
“Israel has in one way or another become the main marketer of IS oil.
Without them, most IS-produced oil would have remained going between
Iraq, Syria and Turkey. Even the three companies would not receive the
oil if they did not have a buyer in Israel,” said the industry official.
According to him, most countries avoid dealing in this type of
smuggled oil, despite its alluring price, due to legal implications and
the war against the Islamic State group.
Delivery and payment
Al-Araby has discovered that IS uses a variety of ways to receive
payments for its smuggled oil – in a manner similar to other
international criminal networks.
First, IS receives a cash payment worth 10 to 25 percent of the oil’s
value upon sale to the criminal gangs operating around the Turkish
Second, payments from oil trading companies are deposited in a
private Turkish bank account belonging to an anonymous Iraqi person,
through someone such as Uncle Farid, and then transferred to Mosul and
Raqqa, laundered through a number of currency exchange companies.
Third, oil payments are used to buy cars that are exported to Iraq,
where they are sold by IS operatives in Baghdad and southern cities, and
the funds transferred internally to the IS treasury. IS responds
Hours before this investigation report was concluded, al-Araby was able to talk via Skype to someone close to IS in the self-acclaimed capital of the “caliphate,” Raqqa, in Syria.
“To be fair, the [IS] organisation sells oil from caliphate
territories but does not aim to sell it to Israel or any other country,”
he said. “It produces and sells it via mediators, then companies, who
decide whom to sell it to.”
Disclaimer: The contents of this article are of sole
responsibility of the author(s). The Centre for Research on
Globalization will not be responsible for any inaccurate or incorrect
statement in this article.
ROLAND SAN JUAN was a researcher, management consultant, inventor, a part time radio broadcaster and a publishing director. He died last November 25, 2008 after suffering a stroke. His staff will continue his unfinished work to inform the world of the untold truths. Please read Erick San Juan's articles at: ericksanjuan.blogspot.com This blog is dedicated to the late Max Soliven, a FILIPINO PATRIOT.
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