wall street journal: Complex Network Smuggles Oil for Islamic State

SHAFAQNA (International Shia News Association) The Islamic State is funding its rapid push into Syria and Iraq with a labyrinthine oil-smuggling operation that starts at seized Syrian oil fields, goes through makeshift refineries and can end up in jerrycans carried by mules into the hilly borderland of Turkey.

Amid Western pressure to squeeze the group’s finances, Turkey is expanding efforts to crack down on the increasingly organized business, which is now generating an estimated $2 million a day.

A major route linking Syrian oil fields with the smuggling enclaves of southern Turkey offers a window onto the complexity of the oil network run by Islamic State, the militant group that controls large swaths of Syria and Iraq. It also demonstrates the challenges of shutting it down.

“It clearly won’t be possible to choke off completely,” said David Butter, a Middle East economy expert at the U.K. think tank Chatham House.

The route begins with oil fields run just a few years ago by Western energy giants and now controlled, along with fuel-smuggling operations in Syria, by the Islamic State.

The militants truck oil drawn from those fields or stolen from pipelines to rudimentary refineries, according to Syrian human-rights activists, Western and Turkish government officials, and a Syrian businessman involved in the trade.

The refined products are sent to the Turkish frontier, where they’re hauled over the border by trucks, horses or mules, according to these accounts. Fuel has also been floated across rivers on rafts or pumped through underground pipelines before finding its way to markets across southern Turkey.

Initially, Turkey largely turned a blind eye to the illicit fuel trade, which ramped up at the start of the Syrian uprising in 2011 along smuggling routes that have existed for decades.

Even as the Islamic State, also known as ISIL or ISIS, solidified its control of the trade, Ankara shied away from an overly aggressive stance. The militant group has been holding 49 Turkish diplomats since June 11 and has released videos depicting grisly executions of battlefield prisoners and hostages, including the beheading of two U.S. journalists and a British aid worker.

But foreign pressure is mounting on Ankara as the Islamic State Atakes more territory and commits more atrocities, and as the group’s financial reliance on fuel smuggling becomes clearer. Oil fields it controls are producing an estimated 100,000 barrels a day, or about 3.2 million gallons, according to analysts and a Western official familiar with the operations—about as much as Sudan.

Much of that is refined and smuggled out to neighboring countries. The revenue can bring in as much as about $2 million a day, estimates Luay al-Khatteeb, a visiting fellow at the Brookings Doha Center.

In the past two weeks, the Turkish military says security forces have confiscated more than 3,540 gallons of fuel, over 2,300 meters (1.4 miles) of pipe used for smuggling fuel, and other equipment at the Turkish-Syrian border. This was mostly done in raids around the Orontes River separating Turkey’s southern Hatay province with Syria, according to statements published on the military’s website on Monday.

In the biggest single raid so far, Turkish forces in July arrested 80 and confiscated 450,000 liters of smuggled fuel in the border town of Hacipasa, according to a Hatay governorate spokesman.

The fuel emerges from fields in eastern Syria once operated by France’s Total SAFP.FR -1.17% and Royal Dutch Shell RDSA.LN +0.04% PLC, which both left the country in 2011 amid spiraling violence. Total operated the Jafra, Qahar and Atalla fields in eastern Syria’s Deir ez-Zor governorate. Shell was a shareholder in al-Furat Petroleum, a Syrian joint venture that controlled al-Omar, the country’s largest oil field, also in the region.

In late 2012, the Western-backed rebel group the Free Syrian Army took control of the Deir ez-Zor fields, and then the Islamic State seized them this year. Representatives of the foreign companies that once operated there say they have no information about the state of the fields now. But many local employees stayed on, keeping the oil pumping as the facilities changed hands between rival factions, according to Syrian activists in the region and recent video of the facilities.

Crude from these fields, as well as oil stolen from tapped pipelines and from other fields across the country, is processed into low-quality fuels, including diesel, in a number of makeshift refineries in Islamic State-controlled Raqqa province, according to human-rights activists from the region and the businessman involved in the trade.

The largest of these plants is near the town of Akrish, the location of a major pumping station along a pipeline transporting oil from fields in Hasakah province, according to local activist Abu Ibrahim Al-Raqqawi. But other operations have popped up elsewhere in Raqqa, in many cases before the arrival of Islamic State.

In 2012, Syrian businessman Mohamed Dada saw an opportunity. He said he spent about $860,000 buying Turkish- and Iranian-made equipment to build four small refining plants near the Syrian border town of Tal Abyad. Earlier this year, however, Islamic State militants seized the Tal Abyad refineries, according to Mr. Dada and Ibrahim Muslem, a human-rights activist familiar with the region. Mr. Dada, who now lives in Turkey, says his equipment was moved from Tal Abyad to neighboring Tal Suluq, a town located at a major crossroad between eastern and western Syria.

Several rebel groups, including the al Qaeda affiliate Jabhat al-Nusra, held sway at different times in Tal Abyad, but Mr. Dada and other Turkish and Syrian businessmen ran the operation, he said. He didn’t pay the rebels, but promised to buy crude from some of them. He said his drivers often had to pay for access to rebel-controlled roads—anywhere from $500 to $1,000.

Mr. Dada said his plants are still operating, but they are under the direct control of Islamic State militants, based on conversations he’s had with people still working there.

Mr. Dada, who estimates that he lost about $2.5 million, including the money he sunk into the plants, pipelines, depots and five tanker trucks, said about a third of his former employees work at the new location, but the rest fled to Turkey.

Al-Hamoud Ali, also known as Abu Luqman, the Islamic State’s “emir” of Raqqa governorate, where the refineries are located, calls the shots now, said Messrs. Dada and Muslem.

“Abu Luqman decides who gets the oil,” Mr. Muslem said.

At Mr. Luqman’s discretion, smugglers pay for fuel and load it into tanker trucks. Refined products from the Akrish refinery are driven more than 200 miles to Syrian villages near the Turkish border, according to Mr. Muslem. The fuel from Mr. Dada’s operations was also being trucked to Turkey when he was in charge. Now, though, it makes its way to Islamic State-controlled parts of Iraq, including Mosul, Mr. Dada said.

In Syrian towns along the Turkish border, trucks are unloaded and some of the fuel is repackaged into smaller containers, according to the Turkish military, local residents and drivers. Some makes its way into Turkey in small, plastic jerrycans, which mules carry over a maze of roads. in largely unpatrolled hills and olive groves.

Some of the fuel is driven through legitimate border crossings, hidden on trucks or farm equipment, like tractors, that pass back and forth across the border legally. Turkish authorities have also found underground pipelines, some as long as 3 miles (4.8 kilometers), under the hilly border. In a Sept. 9 raid, the Turkish military said it confiscated fuel from a 300-yard-long underground pipeline.

Smugglers also load up rafts with diesel-filled jerrycans and float them across the Orontes river, near Hacipasa. Once across the border, it is sold by residents in the southern Turkish towns of Hatay province at local markets for discounts of as much as 30% to legitimately sourced diesel, according to drivers and Hatay residents.

According Turkish customs and Trade Ministry’s figures, the smuggled fuel and oil products Turkish authorities confiscated in raids and checks during the first six months this year already matched the total for 2013 of about 37 million kilograms (41,000 tons). While the ministry didn’t specify the country of origin of the toll, Turkish military’s public figures show most product comes from Syria.




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