Smoke rising from a burning oil well in the town of Qayyara as set on fire by ISIS militants during battle with Iraqi troops. Photo Rudaw
ERBIL, Kurdistan Region – Following the recapture of Shargat and Qayyarah – two oil-rich towns in northern Iraq – by the Iraqi army, the Islamic State (ISIS) no longer holds an oil well in Iraq, forcing the terrorist group to rely on other resources as it suffers from a lack of fuel.
For the past two years, ISIS operated several oil wells in Iraq, selling some of the oil as well as using it to fulfill their internal needs.
The Iraqi armed forces drove the last nail into the coffin of ISIS’ oil resources in Iraq when they retook the oilfields of Shargat and Qayyarah, leaving the militants unable to produce oil in Iraq and unable to smuggle oil out of Iraq and for sale.
“Iraq is no more a home to oil for ISIS. Not only is the group unable to sell oil, but also they want to buy it in order to maintain its activities,” said Dr. Bewar Khinsi, an economic adviser to the Kurdistan Region’s intelligence agency.
There is now very little oil in Iraq owned by ISIS “from its stores in its controlled areas, notably Hamam Alil, which they take advantage of for their refineries,” he suggested, referring to a town which is in northern Mosul.
Qayyara was home to 62 oil wells and an estimated five billion barrels of oil yet untapped. This strategic area was liberated from the group last month. ISIS set fire to the oil as they retreated.
ISIS also used to smuggle oil out of southern Kirkuk’s Hamrin and Hijel oilfields. But after a series of military operations by Kurdish Peshmerga forces, they were driven out of that area, too.
However, Hijel oilfield, which had the capability to produce 100,000 bpd (barrels per day) in the past, is now a prohibited area under the control of no party as it is in an area disputed between Erbil and Baghdad.
Another strategic oilfield, Alas in Tikrit, which was taken over by ISIS in 2014 is now under the control of Iraqi forces.
Ain Zala and Batma on the Kurdistan Region border were reclaimed by Peshmerga security forces, too.
Losing the oilfields has severely weakened ISIS’ finances. It can no longer obtain the revenue that it used to gain after its initial rapid expansion through large swathes of northern and western Iraq. ISIS now largely depends on resources in Syria for income.
“The oil ISIS holds in Syria constitutes 70% of its total income as they hold six key oilfields in the country,” Khinsi explained.
In Syria, ISIS holds three significant oilfields. Of the 80,000 barrels ISIS produces on a daily basis, it sells 50,000 through smuggling and “each barrel sells for $15 to $20.”
According to Khinsi’s figures, the extremist group makes an estimated $750,000 daily and $22.8 million per month.
But oil is not the terrorist group’s only source of income, the Kurdish economist explained. “Euphrates and Al Baath dams produce electricity and the Syrian regime buys it.”
A local from Mosul told Rudaw that ISIS is looking for other ways to gain an income, even playing on the anticipated military operation to liberate the northern Iraqi city.
“It is rumoured among the Mosul people that they will be allowed by ISIS to leave the city if they pay $4000,” a Mosul resident, who declined to reveal his name, told Rudaw, adding that “the Mosul people do not trust ISIS as they believe they will lose both, their lives and money.”
The weakness in its financial resources has forced the group to increase taxation on entrepreneurs and fuel prices.
“The price of one gas cylinder is 80,000 IQD [$70] and one barrel of oil sells for $100 and one liter of petrol costs between 500 to 2,000 IQD [more than $1],” the Mosul resident detailed.
Oil from Syria is smuggled into Mosul to fuel the city’s electricity generating station.