There’s nothing new about smuggling oil in the Middle East. Between 1997–2003, the Iraqi government sold an estimated $8billion in oil despite an international embargo, according to the UN-commissioned Volcker report into the Oil-for-Food Programme.
Over the past year, ISIL has made a reputation for smuggling oil to fund its activities, but it’s far from the only group involved.
‘There are different ways that the oil industry functions in Syria and Iraq,’ says Michael Stephens, deputy director for the Royal United Services Institute’s Qatar office. Much depends on the geographical location. ‘In Syria, there are simple systems where you boil up the oil in a kiln and then ship it down to a local petrol station to use,’ he says.
There are also more complex operations where you have refineries with tankers that go up to the border with Turkey and Iran, according to Stephens. The oil is sold to middlemen with bribes paid at checkpoints. ‘Oil is smuggled in hidden compartments, or there’s assistance from corrupt government officials,’ he says.
The smuggling routes tend to be done by pre-existing networks of smugglers who have ways of concealing oil in compartments in vehicles, adds Stephens. There is a demand for the energy coming out of Iraq and Syria, particularly in Iran and Turkey, and some oil is even sold from rebel areas back to areas controlled by Bashir al-Assad.
There is also oil coming out of Syrian Kurdistan, but it’s less well refined. In Iraqi Kurdistan most oil refineries are very well accounted for and come under the structure of multinational companies.
“Once it’s in the system it is difficult to trace it. Generally speaking it is mostly local consumption”
Oil origin can be determined through sulphur content. ‘If it’s high in CH4 [Methane], it probably comes from north-east Syria because the refining process is not good enough to remove those impurities. Some people do not want to look. They put it in the car and off they go,’ says Stephens.
A local administration might buy it, but central government will usually not know anything about it. There are individuals, politicians, and businessmen who are making more money from the smuggling, according to Stephens. ‘There are rumours that some has gone out to market in Europe and Iran,’ he says. ‘Once it’s in the system it is difficult to trace it. Generally speaking it is mostly local consumption. It is impossible to quantify.’
Amateur refining takes place in kilns. ‘The biggest kiln I’ve seen produces about half a million litres or 5,000-6,000 barrels a day,’ says Stephens. He describes the most basic as looking like potting kilns with one person shovelling in the oil: ‘There are six or seven tanks lined up horizontally. These are boiling vats, as the oil heats up it separates out. The air smells of sulphur.’
Controlling petrol stations and refineries is crucial for local politics. If a group can gain control of the petrol stations and small refineries, it can operate a primitive centralised government.
Larger refineries require skilled workers though. Groups like ISIL have retained trained workers. ‘Ironically, the Iraqi and Syrian governments pay for the workers,’ says Stephens. ‘The workers are still on government salaries. I struggle to understand it, but that’s what happens. It’s not always the case that ISIL or the Kurds are paying their own guys.’ In the long run it will be difficult to manage these larger refineries without spare parts and international expertise, he adds.