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Guest Post by Erik Zouave: Iraq, Syria and the trade in opposition oil – A background to armed group activities and control of oil wells

June 30, 2014

About the Author

Erik Tristan Zouave joins us again for a guest post. This time, Erik (LLM University of York), who is a former Research Assistant at the Swedish National Defense College International Law Center, will address in two posts the very topical issue of oil wells (and/or refineries) being taken over by opposition forces in Syria and Iraq, as well as whether the trade of such oil can be seen as the war crime of pillage. The first part is posted today and the second part, containing the legal analysis, will be posted tomorrow.

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The Islamic State of Iraq and Syria (ISIS), which has now renamed itself Islamic State, have recently increased their activities in the oil-rich Deir Al-Zour region of Syria (see here) and launched campaigns to take control of the Baiji oil field in Iraq in the beginning of this week (see here). Approximately one year ago, the European Union and the US decided to lift their embargoes against Syrian oil, more particularly the oil from opposition-controlled regions. At the time, the decision, created quite a bit of controversy in western and eastern media (see herehere and here). Accusations hailed in the news that the decision breached the prohibition of aggression as well as accusations of “complicity in the theft of resources that belong to the Syrian people, represented by the current, legitimate government” (see here). Neither of these accusations generated much of a response from the western powers at the time, yet the recent progress of extremist groups may necessitate a review of the approach (and signals that have been sent) regarding insurgent oil extraction (and theft) in the region so far. While infrastructural obstacles make it is doubtful that the lifting of the sanctions generated any western trade with opposition-extracted minerals, the same cannot be said for Syria’s neighbors. News sources indicate an active trade in the opposition’s oil supply, which could become a key economic component for financing the opposition’s warfare, even for groups such as ISIS.

In this post I will present a background and reflections on the current events, spanning approximately a year back, relating to armed groups and the Syrian and Iraqi oil. In a subsequent post (which will be posted later in the week), I will demonstrate the strong historical connection between the crime of pillaging (resources such as oil) and individual criminal liability in humanitarian law.

Armed groups and oil in Syria and Iraq – A background

While Syria’s oil industry is dwarfed by many of the other countries in the region, the issue of who may legitimately trade in Syria’s oil is an important debate pushed by internal as well as external actors to the current conflict. Policy-wise, this has been evident firstly in the imposition of sanctions against trade in oil originating from Syria, secondly in the opposition’s strategy to control the oil resources bordering towards Iraq, thirdly in the Assad regime’s sanctions busting and finally in the sanctions lifting and trade with opposition oil in the region.

On the 18th of August, 2011 the US adopted Executive Order 13583, prohibiting all trade and related activities with Syrian oil. The European Union followed suit on the 2nd September, 2011 by adopting Council Regulation (EU) No 878/2011imposing restrictive measures on the import, purchase and transport of Syrian oil and the financing of or participation in activities pertaining to the import and purchase of oil. Two years later, the Free Syrian Army seized control of most of the oil resources located in the Deir Al-Zour and Al-Hassakah Provinces (see here and here). Deir Al-Zour, located in the Euphrates Valley, and Al-Hassakah, bordering northern Iraq had previously been a site of US oil enrichment in Syria. According to David Butter the Deir Al-Zour oil field produced 400,000 barrels of oil per day during its heyday in the 1990’s, and dropped to 100,000 per day in 2011. While the Al-Hassakah field have had a steady yield of around 200,00 barrels per day. As for the economic impacts and benefits the opposition enjoys by controlling these oil fields, David Butter posits that:

The scale of oil production in rebel areas is difficult to gauge. Given the damaged infrastructure and the lack of pipelines to serve the new trading routes, crude output is unlikely to be more than 20,000 b/d. However, even assuming a significant discount from world market prices, this could correspond to revenues of some $50 million per month.

The sanctions and the loss of internal control over internal sources put pressure on Assad to seek new partners and new sources of oil. Al JazeeraNew York Times and Reuters report significant sanctions-busting activities between Assad, Iraqi, Iranian, Lebanese and Egypt firms. In its article, Aljazeera states that “Syria imported up to 17 million barrels of crude oil between February and October, of which roughly half came directly from Iran and half from Egypt’s Sidi Kerir port.” Significantly less was known about the opposition’s oil access during sanctions, also given possible damage to the oil wells under their control. However, the universal maxim of commodity sanctions is that they benefit those who are best placed (with diplomacy and trade networks) to bypass them. 

Following the opposition’s seizure of the oil fields (and probably following intelligence about the Assad’ regimes ability to bypass the oil embargoes) and disputes over eastern (Russian) non-interference in the conflict, the West decided to lift the oil embargo, allowing trade in opposition-oil. On May 31st, 2013, the EU adopted Council Decision 2013/255/CFSP easing the restrictive measures on the Syrian oil trade. The decision lifted the restrictive measures against Syrian oil trade given that:

the activities concerned are for the purpose of providing assistance to the Syrian civilian population, in particular in view of meeting humanitarian concerns, assisting in the provision of basic services, reconstruction or restoring economic activity, or other civilian purposes.

Experts argue that despite the explicit aims behind easing the trade restrictions, it is unlikely that European and American actors are trading in opposition oil. Julia Payne, for example argues that unless the opposition were to establish a proper political administration with executive powers to supervise sales and organize contracts, trade by and with the opposition, is mostly likely to take the guise of crude oil transports into Turkey. Additionally, Nasser Chararah notes that prior to any significant trade from the Euphrates Valley oil fields, the wells will have to undergo infrastructural and technical rehabilitation and upgrades. Both sources further point to the uncertainty of which faction within the opposition is actually controlling the oil sources. Ben Hubbard et al go as far as questioning whether any of the western-friendly factions have anything to do with the control of the oil wells. They further argue that the situation most likely has benefitted groups like ISIS and other Al-Qaeda offshoots. As stated earlier, sources suggest that these groups have recently doubled their efforts in the Deir Al-Zour region. Most recently, ISIS has also imported its strategy to target oil wells to the conflict in Iraq. It is clear that ISIS (and possibly other disparate groups) have gained an increased foothold in the Anbar Province in Iraq and the areas around Baghdad. Aljazeera further reports that since the 17th of June, ISIS has been launching campaigns to control the Baiji oil fields north of Baghdad.

So is anyone actually trading in the opposition oil? And if so, who? Given the limited accessibility of the conflict, it is hard to tell. Moreover reports, such as the ones produced by David Butter and Julia Payne indicate that transactions have most likely been routed through Turkey. This hypothesis is corroborated by Josh Wood’s analysis, stating that it was initially a Kurdish faction in Syria with ties to the Turkish Kurdistan Worker’s Party (PKK) that took control of the oil fields from the Syrian regime. The same source also posits the neighboring territories as the most probably trading partners with rebel units. Given the geographic location of the oil fields, and the lack of transparency in the Iraqi Kurdish oil production, Kurdish actors within Iraq would also constitute plausible trading partners. It is even suggested by analysts like David Butter and Ben Hubbard that some of the oil is being sold back to the Assad regime.

Some final reflections

Needless to say, recent ISIS campaigns in the oil-rich areas of Syria and against Iraqi oil fields suggest that there may be a need to consider the dilemma of insurgent oil extraction and theft more seriously. This should also serve as a reminder to any national or regional body managing commodity sanctions that sanctions lifting may also lead to unintended consequences and legal repercussions (see part two of this analysis). As stated above, commodity sanctions benefit those best positioned to bypass them. In view of ISIL’s current campaigns in areas of oil wealth, the question now is – even if measures, such as sanctions, were taken to prevent ISIS from reaping the benefits of the oil, has a Sunnite smuggling network strong enough to bypass such measures now been allowed to accumulate since last year?

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