Former Iraqi Oil Minister Issam al-Chalabi said on Aug. 27 that estimates from reliable reports confirm that the Islamic State (IS) would reap between $100-150 million from the smuggling of Iraqi oil during 2014. He said that the quantity of the smuggled oil is so large that it is impossible to monitor and determine the dealers involved in this trade. Chalabi, an international energy consultant whose headquarters is in the Jordanian capital of Amman, stressed in statements made to Azzaman that there are no accurate figures on IS’ oil revenues. He added that statements about the revenues of IS are mere speculation.
He explained that Turkish parties — whether individuals or institutions — are the only beneficiaries of oil smuggling from Iraq and Syria. He also said that the smuggled oil of these two countries by IS cannot help but pass through Turkey. Chalabi told Azzaman that international oil companies are involved in these kinds of operations, given the return that has been achieved and the low price at which they purchase smuggled oil.
He added that Iraqi oil may be smuggled through Iran, but the only outlet for smuggling Syrian oil is Turkey. In his statement to Azzaman, Chalabi explained that illegal smuggled oil trade is widespread in Turkey’s southern borders with Syria and Iraq. He pointed out that there are small oil filtering units in this region and similar units are found in the Kurdistan Region of Iraq.
Chalabi confirmed that IS is currently dominating Greater Syria’s oil fields in Deir ez-Zor, where oil is being smuggled from these well-known oil fields.
“IS’ battles gradually expanded in regions rich in economic resources and, it dominates today a large group of Syrian oil fields, which are mainly concentrated in the northern areas such as the al-Jebsa, Kuniko, al-Omar and Shaddadi oil fields,” Chalabi said.
“The daily-produced oil quantities in the northeastern regions of Syria are estimated to be 50,000 barrels and the average selling price reaches up to $30 per barrel, not to mention gas revenues,” he said. “Gas is being sold to local traders or packaged in cylinders and sold for domestic use. Moreover, these resources had been previously distributed among the opposition armed brigades and Jabhat al-Nusra before being seized by IS.”
IS is also selling gas to the Syrian regime, as The New York Times reported. The organization continues to supply the regime with gas to run electric power stations, including Jandar power station in Homs, which is supplied with gas from the Kuniko gas field in exchange for a monthly sum that is paid through intermediaries.
Regarding the oil fields under IS control in Iraq, Chalabi told Azzaman that the organization was currently running seven or eight small oil fields including fields in Ain Zala, al-Kiyara, al-Ojeil and Makhoul, among others. The international energy expert said that the production capacity of these fields is 70,000 barrels per day, but the size of production by IS is still unknown. Chalabi said that the profits of oil smuggling are undoubtedly large.
He also told Azzaman that it was difficult to determine the quantities of smuggled oil because the authorities did not set counters on crude oil wells and pipelines when oil is transferred to tankers.
IS acquires oil revenues estimated at $3 million per day. These figures are consistent with those of energy experts, who state that IS oil revenues from Syria and Iraq amount to over $3 million a day.
Chalabi also said that pumping oil out from exploited wells to tankers does not require great technological capabilities, especially with lax security on the borders between neighboring countries, where authorities turn a blind eye to smuggling operations of oil and its derivatives.
Chalabi said oil smuggling outside the border has become common for countries under international sanctions, as they try to find ways to sell additional quantities of oil by smuggling them.
Chalabi said that Asian countries are likely on the receiving end of the smuggled oil, such as India, Pakistan, Bangladesh and Afghanistan, given the lower oil prices. They pay $20 per barrel while the barrel is worth $100 on the global markets.
Chalabi told Azzaman that the main sources of smuggled oil were Iran, Iraq, the Kurdistan Region of Iraq, Syria and Libya.
He told Azzaman that oil smugglers have collaborators with whom they share profits, and that there were countries cooperating in the smuggling of oil.
He said that Iraq used to export oil outside the scope of the oil-for-food program when it was under UN sanctions.
Chalabi contended that caravans used to cross from Iraq to Iran's coast and a bill of lading was issued to a specific person, provided that the smuggled Iranian oil was transported in the military battleships of Western countries in the Persian Gulf, to reach the warehouses that were built for this purpose in the Arab Gulf countries.
Chalabi said that after the US occupation of Iraq, seven ports were used to smuggle oil from southern Iraq via pipelines. This oil was collected in artificial oil lakes then smuggled by trucks or marine caravans.
Regarding the ability to monitor smuggled oil, Chalabi told Azzaman that they are indeed able to monitor smuggled oil and identify any smuggled oil consignment by determining the characteristics. Laboratory analysis can determine the origin of smuggled oil and even the field from which it was extracted.
He added that the exported oil is being analyzed in tankers and at the port of discharge and that satellites and Lloyd’s List monitor oil tanker traffic.
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