Production declines in oil fields controlled by the Islamic State of Iraq and the Levant (ISIL) have been less dramatic than expected, because ISIL has promised to protect workers and pay their wages, according to GlobalData.
Furthermore, ISIL is able to fund its war operations primarily by controlling oil fields that it has strategically seized, gaining an estimated US$ 2–3 million daily from oil smuggling.
Ali Rasheed, GlobalData’s Upstream Analyst, states that ISIL is selling the oil in Iraq’s Sunni-majority regions at a price of US$ 10–22 per barrel and sometimes-higher prices. Oil is also being smuggled into Turkey, Kurdistan and Iran, where buyers risk breaking the law to access crude at a fraction of the market price.
Rasheed says: “A good percentage of ISIL’s oil revenues come from the Hamrin and Ajeel fields. Hamrin is estimated to hold remaining recoverable reserves of 303 million barrels of oil equivalent (boe), while Ajeel has approximately 500 million boe and 496 billion ft3 of gas.
“Production levels under ISIL’s control were maintained and have fallen less than anticipated.”
Rasheed adds that the two fields combined currently generate approximately US$ 1 million each day for ISIL.
He continues: “Productivity at each of the 33 Hamrin wells under ISIL control is around 334 barrels per day, constituting an estimated US$ 700,000 of daily revenues, and Ajeel’s wells generate around US$ 320,000 per day.
“While it is assumed that ISIL will lose control of these fields by the end of the year due to UN-authorised air strikes, an estimated decline in remaining net present value would be much lower than initially expected.”
Rasheed concludes that Hamrin and Ajeel will continue to be prolific assets after ISIL loses control of them.
Source: GlobalData.
Edited by Katie Woodward