Peak Oil is You
Donate Bitcoins ;-) or Paypal :-)
Page added on September 4, 2014
ISIS’ struggle to control its oil riches
ISIS videos are part of today’s new reality. One of the many to hit social media has the viewer hearing a recitation of Quranic verses describing a jihad in the battle for Syria’s Al Omar energy facility. Syria’s largest oil field is one of a handful now under the firm grip of the terrorist organization.
ISIS may not be operating the type of polished pipeline infrastructure one would find in southern Iraq around Basra, but Iraqi oil ministry officials say an old fashioned truck network for this crude is active and serving distribution needs.
And now, after nearly three months of heated battle in Iraq, one can see a clearer picture of where ISIS stands as an energy player.
It popped up on the global radar in June by seizing assets in Iraq, but building on those early gains, according to a number of energy sources, is proving difficult. August was not a good month for ISIS.
It lost its battle for one of Kirkuk’s big fields, with potential production of 600,000 barrels a day, and could not keep control of Iraq’s largest refinery at Baiji, on the main road to Mosul.
What they do hold, Iraqi officials suggest, will need maintenance. So far, it is getting that work done only through intimidation of on-site engineers who are not loyal to the ISIS cause. ISIS’ income from oil is falling as they struggle to control the personnel within refineries, according to Assim Jihad, a spokesman at Iraq’s Oil Ministry.
“At first they got a large sum of money by seizing inventories, but this cannot last,” he added.
The Iraq Energy Institute estimates ISIS is producing about 30,000 barrels a day in Iraq and 50,000 daily in Syria. On a black market price of $40 a barrel, it is earning $1.2 million a day in Iraq and $2 million in Syria.
ISIS sells $3M of black-market oil dailyEnergy traders and regional security specialists tell me supplies are being funneled into regional oil importing countries of Jordan, Turkey, and Syria.
“They use oil tank trucks instead of oil pipes. There are about 210 oil tank trucks smuggling oil to Turkey and other places every day,” Hussein Allawi, senior consultant at Iraq’s oil ministry told me.
The transport may be rudimentary, but this network of black market traders stretches back to the days of Saddam Hussein, when Iraq was under UN sanctions in the 1990s.
“We are not talking about people who own a couple of trucks and tanker trucks,” said Kate Dourian, senior editor at the Middle East Economic Survey. “We are talking about certain market-oriented people who have organizations that trade in illegal oil.”
ISIS has taken a page from Hussein’s war playbook, when he left Kuwait. Still pictures of fields torched have emerged this week of fields outside of Mosul when it was pushed out by Iraqi forces.
Oil strategists say Iraq’s national military and the Peshmerga forces of the Kurdish region are trying to strike a fine balance. They want to keep ISIS out of their prized fields and refineries, but they don’t want to destroy infrastructure which would take years and millions of dollars to rebuild.
While ISIS has clearly suffered setbacks, there is also a stark reality.
The organization may be falling short of designs to become a “state” oil company, but revenue of over $3 million a day can certainly finance its operation of terror.
14 Comments on "ISIS’ struggle to control its oil riches"
Plantagenet on Thu, 4th Sep 2014 12:09 pm
The Caliphate seems to be smart enough to target oil infrastructure in the gulf—something al qaida never thought of.
Poordogabone on Thu, 4th Sep 2014 1:14 pm
It wouldn’t take much for the US or any air force to interdict ISIS oil traffic. The tankers or oil rigs would be easy targets.
Beside the rhetoric we seem perfectly OK with the status quo.
Turmoil in the ME is our main objective IMO. They give us oil, we give them weapons.
Eventually this policy will come back to bite us in the ass. We need them more than they need us.
shortonoil on Thu, 4th Sep 2014 1:15 pm
If these mongoloid neanderthals think they can keep these fields producing at $40/barrel, and without western equipment, and expertise they have been smoking the pages of their Korans. Saddam Hussein tried that in the 90’s with a very well trained, and dedicated work force only to completely destroy some of his best wells. A few reservoir engineers who don’t go along with the ISIS doctrine of the “revenge of Allah” can turn these fields into watered out mud holes in a year or two. and these baboons will never understand who stole their banana!
The ISIS is a good example of what happens when a troop of monkeys get a hand grenade. Maybe they will threaten the Russians a couple more times, and Putin will go down an exterminate these maggots for us.
Davy on Thu, 4th Sep 2014 1:35 pm
Get-em short! total agreement here with me
Northwest Resident on Thu, 4th Sep 2014 1:48 pm
One of these days, hiding behind women and children and using populated civilian non-combatant zones as staging areas for attacks will cease to be effective. When the world is preoccupied with financial collapse, food shortages, drought and long gas lines, that’ll be about the time that military units might fudge the rules of engagement a little and rid the shifting desert sands of these vermin once and for all, much to the benefit of the rest of humanity. Hiding within civilian populations worked well in Vietnam, Afghanistan and everywhere else that civilized rules of engagement have been generally adhered to. When “civilized rules of engagement” no longer apply, that’s when wiping out the Taliban and ISIS and a lot of other cruel “Neanderthal” vermin will become as easy as pushing a button.
Dave Thompson on Thu, 4th Sep 2014 2:23 pm
The people in Iraq want to control the oil wealth that belongs to the people of Iraq. The US paints this picture of insurgency to justify the interdiction of US military might. The Iraq oil is still sold on the market because it is what runs the world.
Perk Earl on Thu, 4th Sep 2014 2:35 pm
The trouble with something getting started like ISIS, (and by the way I think there have been many attempts to change that name to all sorts of other letters because ISIS has a ring to it, and who wants an enemy with a cool sounding name?), is it becomes increasingly difficult to eradicate. Hitting them from the air will no doubt have an impact, but there is no way to get rid of them without boots on the ground.
I find it sort of interesting that it was the 2nd beheading of an American that changed the discourse on ISIS from taking pot shots at them to a more concerted effort. Thousands of people have been killed by this group, but a 2nd American killed in a heinous way tips the scale? Beheading is actually an extremely quick way to go vs. torture. That’s why the guillotine was invented. Conversely some of the executions here in the US have recently taken up to 45 minutes or longer. If given a choice between being executed in Oklahoma or by ISIS via beheading, I’d say off with my head! Fortunately I don’t have to make that choice.
I agree with your comment Plant, i.e. “The Caliphate seems to be smart enough to target oil infrastructure in the gulf…”
Don’t get me wrong though, I’m not a fan of ISIS, in fact I applaud the resolution to go after them. I particularly felt for the Kurds who usually are left to their own devices while the Sunni and Shiite fight it out. I just think it is pure folly to think we can rid them from the air.
JuanP on Thu, 4th Sep 2014 2:43 pm
Perk, a history of ISIS names and origins: http://en.m.wikipedia.org/wiki/Islamic_State_of_Iraq_and_the_Levant
Davy on Thu, 4th Sep 2014 5:15 pm
The US needs to contain the ISIL beast with air-power and Shia and Kurd’s boots on the ground. Let them live with the constant hummmmm of drones of death and see how they like that. Let them go into battle knowing the Kurds or Shia’s have precision airpower on their side see how they like that. Put the financial pressure on them. ISIL is a warrior culture like the Taliban. They cannot be eradicated without huge expenditures so leave them be and bust em where possible. Who cares if they threaten the home front? What is new with that? Nothing! Muslim fanatics are a constant threat and will be until BAU collapses and the world goes local. We have more danger from the lone wolf American then the ISIL savage.
trickydick on Thu, 4th Sep 2014 8:56 pm
Why should I care what ISIS does and why should I pay tax money to bomb them? Let Israel bomb them. I don’t want to get involved. We’ve spent trillions bombing Iraq and we have very little oil to show for it. There is nothing there of value except oil and we managed to end up producing less than before.
What did we get from bombing Afghanistan for months and occupying for years? A massive tax bill and NO OIL.
We should leave the sand people to their own devices and turn off the TV when a story about them comes on. Not my problem. Secure the Mexican border and our ports and then maybe we can talk about intervening in the Middle East.
synapsid on Thu, 4th Sep 2014 10:52 pm
Dave Thompson,
“…interdiction of US military might.”
?
Think what “interdiction” means.
Makati1 on Fri, 5th Sep 2014 3:40 am
trickydick, the average man in the street gained nothing but debts from the ‘wars’ but the billionaires doubled and tripled their net worth in those years. You don’t really think those wars had anything to do with safety or democracy do you?
trickydick on Fri, 5th Sep 2014 7:21 pm
Right, Makati. The wars were certainly not for us little people. They can’t wait to launch another one, though.
Bob Owens on Fri, 5th Sep 2014 7:40 pm
What we are seeing when resources run short is happening in the ME now. Heightened ethnic conflicts, shifting alliances, warlords, terrible brutality and all the other nasty stuff. As this evolves the oil will stop flowing, money will dry up for them, drought, starvation, constant tribal warfare will slowly reduce the population until the degraded land can support them. This will go on for decades; WW III has just started. This is our future.