Daesh oil revenue dips as it loses territory
Terror group forced to cut fighters’ pay, levy new taxes and raise fines
Daesh, pushed off more than half the Iraqi territory it seized in 2014, has suffered a near collapse in revenue from oil smuggling, officials say, forcing it to cut fighters’ pay, levy new taxes and raise fines for breaking its religious code.
The terror group has lost control of a series of oilfields, and is having to sell what production that remains at steep discounts to persuade truck drivers to collect it and run the gauntlet of US-led air strikes.
Alongside taxes, ransoms and antiquities trading, oil has been a major fund-raiser for Daesh operations. At one point it made millions of dollars a month in sales to neighbouring Syria and Iran, or to makeshift local refineries.
However, advances by Iraqi government and Kurdish forces plus Shiite militias have left the militants with partial access to just two of the five Iraqi oilfields they once controlled. This has cut smuggling by at least 90 per cent, according to security and municipal officials.
Daesh used to sell at least 50 tanker truckloads a day from Qayara and Najma oilfields, south of the group’s Mosul stronghold. This crude was mostly shipped to Syria to barter for automobile fuel, said Mosul provincial councilman Abdul Rahman Al Wagga, who moved to the Iraqi Kurdish city of Arbil after the fall of Mosul.
“Now with Iraqi forces getting closer and stepping up air strikes, Daesh can hardly sell five small tankers,” he said.
Precise figures on how much Daesh raises from oil are hard to come by. Lu’ai Al Khatteeb, executive director of the Iraq Energy Institute who has done extensive research into Daesh’s oil smuggling, said revenues fluctuated even during their peak in the second half of 2014 when “on its best days” the group made nearly $700,000 (Dh2.5 million) a day from Iraqi fields.
In May, the US estimated its revenue had been roughly halved to $250 million a year from the territory it controls in Iraq and Syria. While the militants have suffered further losses since then in Iraq, they still control several oilfields in eastern Syria, where US-backed rebels have had less success in ejecting them.
Losing production
Daesh took the Iraqi oilfields, with a total capacity of nearly 60,000 barrels per day (bpd), when they swept through the north and west two years ago. This prompted the air strikes from the US-led coalition which have targeted financial infrastructure as well as fighters and leaders. The group has been losing production for some time. Kurdish Peshmerga forces took the Ain Zala oilfield, northwest of Mosul, in late 2014.
Khatteeb’s estimates are at the conservative end of the range. Security officials and an oil ministry adviser say Daesh’s revenue fell by $1 million a day in April 2015 alone when it lost the Ajil and Himreen oilfields near the city of Tikrit, which lies about 150 kilometres north of Baghdad.
Now Iraqi forces pushing towards Mosul for a planned year-end offensive are close enough to Qayara and Najma fields, about 60km south of the city, to reduce their operations substantially, said security and local officials. The danger smugglers face from coalition air strikes to collect the oil has forced Daesh to slash prices.
“Daesh is luring local traders in Mosul to buy its crude from Qayara and Najma by cutting the price from $6,000 per tanker to just $2,000,” said Wagga.
Mosul pro-