Isis Inc: how oil fuels the jihadi terrorists

Financial Times

by Erika Solomon in Beirut, Guy Chazan and Sam Jones in London
Additional reporting by Ahmad Mhidi, an independent journalist based on the Turkish border and Geoff Dyer in Washington

Jihadis’ oil operation forces even their enemies to trade with them

On the outskirts of al-Omar oilfield in eastern Syria, with warplanes
flying overhead, a line of trucks stretches for 6km. Some drivers wait
for a month to fill up with crude.

Falafel stalls and tea shops have sprung up to cater to the drivers,
such is the demand for oil. Traders sometimes leave their trucks
unguarded for weeks, waiting for their turn.

This is the land of Isis,
the jihadi organisation in control of swaths of Syrian and Iraqi
territory. The trade in oil has been declared a prime target by the
international military coalition fighting the group. And yet it goes on,

Oil is the black gold that funds Isis’ black flag — it fuels its
war machine, provides electricity and gives the fanatical jihadis
critical leverage against their neighbours.
But more than a year after US President Barack Obama launched an
international coalition to fight Isis, the bustling trade at al-Omar and
at least eight other fields has come to symbolise the dilemma the
campaign faces: how to bring down the “caliphate” without destabilising
the life of the estimated 10m civilians in areas under Isis control, and
punishing the west’s allies?
The resilience of Isis, and the weakness of the US-led campaign, have given Russia a pretext to launch its own, bold intervention in Syria.
Despite all these efforts, dozens of interviews with Syrian
traders and oil engineers as well as western intelligence officials and
oil experts reveal a sprawling operation almost akin to a state oil
company that has grown in size and expertise despite international
attempts to destroy it.
Minutely managed, Isis’ oil company actively recruits skilled workers, from engineers to trainers and managers.

Estimates by local traders and engineers put crude production in
Isis-held territory at about 34,000-40,000 bpd. The oil is sold at the
wellhead for between $20 and $45 a barrel, earning the militants an
average of $1.5m a day.
“It’s a situation that makes you laugh and cry,” said one Syrian
rebel commander in Aleppo, who buys diesel from Isis areas even as his
forces fight the group on the front lines. “But we have no other choice,
and we are a poor man’s revolution. Is anyone else offering to give us

Oil as a strategic weapon

Isis’ oil
strategy has been long in the making. Since the group emerged on the
scene in Syria in 2013, long before they reached Mosul in Iraq, the
jihadis saw oil as a crutch for their vision for an Islamic state. The
group’s shura council identified it as fundamental for the survival of
the insurgency and, more importantly, to finance their ambition to
create a caliphate.

Journey with a barrel of Isis oil

  Isis oil map

Selling crude is Isis’ biggest single source of revenue.
the progress of a barrel of oil from extraction to end user to see how
the Isis production system works, who is making money from it, and why
it is proving so challenging to disrupt

Most of the oil Isis controls is in Syria’s oil-rich east, where it
created a foothold in 2013, shortly after withdrawing from the
north-west — an area of strategic importance but with no oil. These
bridgeheads were then used to consolidate control over the whole of
eastern Syria after the fall of Mosul in 2014.
When it pushed through northern Iraq and took over Mosul, Isis
also seized the Ajil and Allas fields in north-eastern Iraq’s Kirkuk
province. The very day of its takeover, locals say, militants secured
the fields and engineers were sent in to begin operations and ship the
oil to market.
“They were ready, they had people there in charge of the
financial side, they had technicians that adjusted the filling and
storage process,” said a local sheikh from the town of Hawija, near
Kirkuk. “They brought hundreds of trucks in from Kirkuk and Mosul and
they started to extract the oil and export it.” An average of 150
trucks, he added, were filled daily, with each containing about
$10,000-worth of oil. Isis lost the fields to the Iraqi army in April
but made an estimated $450m from them in the 10 months it controlled the
While al-Qaeda, the global terrorist network, depended on
donations from wealthy foreign sponsors, Isis has derived its financial
strength from its status as monopoly producer of an essential commodity
consumed in vast quantities throughout the area it controls. Even
without being able to export, it can thrive because it has a huge
captive market in Syria and Iraq.

Indeed, diesel and petrol produced in Isis areas are not only
consumed in territory the group controls but in areas that are
technically at war with it, such as Syria’s
rebel-held north: the region is dependent on the jihadis’ fuel for its
survival. Hospitals, shops, tractors and machinery used to pull victims
out of rubble run on generators that are powered by Isis oil.
“At any moment, the diesel can be cut. No diesel — Isis knows our
life is completely dead,” says one oil trader who comes from rebel-held
Aleppo each week to buy fuel and spoke to the Financial Times by

A national oil company

Isis’ strategy has rested on projecting the image of a state in
the making, and it is attempting to run its oil industry by mimicking
the ways of national oil corporations. According to Syrians who say Isis
tried to recruit them, the group headhunts engineers, offering
competitive salaries to those with the requisite experience, and
encourages prospective employees to apply to its human resources
A roving committee of its specialists checks up on fields,
monitors production and interviews workers about operations. It also
appoints Isis members who have worked at oil companies in Saudi Arabia
or elsewhere in the Middle East as “emirs”, or princes, to run its most
important facilities, say traders who buy Isis oil and engineers who
have worked at Isis-controlled fields.
Some technicians have been actively courted by Isis recruiters.
Rami — not his real name — used to work in oil in Syria’s Deir Ezzor
province before becoming a rebel commander. He was later contacted by an
Isis military emir in Iraq via WhatsApp.

“I could choose whatever position I wanted, he promised me,” he
said. “He said: ‘You can name your salary’.” Sceptical of the Isis
project, Rami ultimately turned down the offer and fled to Turkey.
Isis also recruits from among its supporters abroad. In the
speech he gave after the fall of Mosul, Isis leader Abu Bakr al-Baghdadi
called not only for fighters but engineers, doctors and other skilled
labour. The group recently appointed an Egyptian engineer who used to
live in Sweden as the new manager of its Qayyara refinery in northern
Iraq, according to an Iraqi petroleum engineer from Mosul, who declined
to be named.
The central role of oil is also reflected in the status it is given in Isis’ power structures.
The group’s approach to government across the territories it
controls is highly decentralised. For the most part, it relies on
regional walis — governors — to administer territories according to the precepts laid down by the central shura.
However, oil — alongside Isis’ military and security operations
and its sophisticated media output — is centrally controlled by the top
leadership. “They are organised in their approach to oil,” said a senior
western intelligence official. “That’s a key centrally controlled and
documented area. It’s a central shura matter,” he added, referring to
Isis’ ruling “cabinet”.
Until recently, Isis’ emir for oil was Abu Sayyaf, a Tunisian
whose real name, according to the Pentagon, was Fathi Ben Awn Ben Jildi
Murad al-Tunisi, and who was killed by US special forces in a raid in
May this year. According to US and European intelligence officials, a
treasure trove of documentation relating to Isis’ oil operations was
found with him. The documents laid bare a meticulously run operation,
with revenues from wells and costs carefully accounted for. They showed a
pragmatic approach to pricing too, with Isis carefully exploiting
differences in demand across its territories to maximise profitability.

Oversight of the oil wells is carefully controlled by the Amniyat,
Isis’ secret police, who ensure revenues go where they should — and
mete out brutal punishments when they do not. Guards patrol the
perimeter of pumping stations, while far-flung individual wells are
surrounded by protective sand berms and each trader is carefully checked
as he drives in to fill up.
At the al-Jibssa field in Hassakeh province, north-eastern Syria,
which produces 2,500-3,000 bpd, “about 30-40 big trucks a day, each
with 75 barrels of capacity, would fill up”, according to one Hassakeh
oil trader.

Isis’ distribution network

But the biggest draw is al-Omar. According to one trader who
regularly buys oil there, the system, with its 6km queue, is slow but
market players have adapted to it. Drivers present a document with their
licence plate number and tanker capacity to Isis officials, who enter
them into a database and assign them a number.

Most then return to their villages, shuttling back to the site
every two or three days to check up on their vehicles. Traders say that
towards the end of the month, some people come back and set up tents to
stay close to their trucks while they wait their turn.
Once in possession of al-Omar’s oil, the traders either take it
to local refineries or sell it on at a mark-up to middlemen with smaller
vehicles who transport it to cities further west such as Aleppo and
Isis’ luck with oil may not last. Coalition bombs, the Russian
intervention and low oil prices could put pressure on revenues. The
biggest threat to Isis’ production so far, however, has been the
depletion of Syria’s ageing oilfields. It does not have the technology
of major foreign companies to counteract what locals describe as a slow
drop in production. Isis’ need for fuel for its military operations
means there is also less oil to sell in the market.
For now, though, in Isis-controlled territory, the jihadis
control the supply and there is no shortage of demand. “Everyone here
needs diesel: for water, for farming, for hospitals, for offices. If
diesel is cut off, there is no life here,” says a businessman who works
near Aleppo. “Isis knows this [oil] is a winning card.”