ISIL is making $1 million a day by smuggling, says former US energy envoy

ISTANBUL – Hürriyet Daily News

Through captured oil wells, ISIL can make $1 million per day by smuggling via Turkey and Iraq, a former US envoy says. REUTERS photo

The Islamic State of Iraq and the Levant (ISIL) is a huge terrorist organization making $1 million day by smuggling oil via Turkey and Iraq, warned a former U.S. envoy on energy.

“Thinking about how to close the borders to smuggling is critical in the fight against ISIL,” said Carlos Pascual, a former U.S. ambassador and special coordinator for international energy affairs, at the Atlantic Council Energy and Economics Summit, which began yesterday.

The foundation of ISIL is the disenchantment of Sunnis in Iraq, and creating a belief among those people that they will benefit from the richness of the country is important, he said.

Through captured oil wells, ISIL can make $1 million per day by selling 50,000 barrels at $20 each, he said. “This is a small amount for a country, but a phenomenal flow of resources for a terrorist organization,” he warned.

Cutting this flow is important in the fight against ISIL, he said.

Turmoil in the Middle East has been a recurring issue, as a prominent expert also warned about the negative implications for international energy markets caused by the instability in the region.

‘$15 bln should be invested in Iraq’

The current calmness in oil markets should not disguise the security problems lying ahead, said Fatih Birol, chief economist of the International Energy Agency (IEA) at the summit.

“The turmoil in the Middle East, and especially Iraq, tells us supply security remains a key issue, despite falling oil prices,” he said.

Lower oil prices will not continue forever, as lower prices will put pressure on oil investments in high-cost regions like the U.S. and Canada, Birol said.

“The reduced cash flow could limit the capacity of North America and Brazil to act as engines for global supply growth,” he said.

Oil production growth and the supply of oil to Europe by the U.S. and Canada will slow down by the 2020s, and without production increasing in the Middle East, it will be impossible to meet the growth in demand while keeping affordable prices.

“Iraq has the potential to provide half of the production, yet in order to see that high level of production by the 2020s, investment needs to start today,” he warned.

“Considering the insecurity today, I don’t see a great appetite for investment. We need at least a $15 billion investment in Iraq,” Birol added.