Photo: Andree Kaiser/TNS/ZUMA PRESS
The Rise and Deadly Fall of Islamic State’s Oil Tycoon
A document trove tells how Abu Sayyaf ran the terror group’s operations; approving expenses for slaves, dodging U.S. airstrikes
By Benoit Faucon and Margaret Coker
Islamic State oil man Abu Sayyaf was riding high a year ago. With little industry experience, he had built a network of traders and wholesalers of Syrian oil that at one point helped triple energy revenues for his terrorist bosses.
His days carried challenges familiar to all oil executives—increasing production, improving client relations and dodging directives from headquarters. He also had duties unique to the extremist group, including approving expenses to cover the upkeep of slaves, rebuilding oil facilities damaged by U.S. airstrikes and counting towers of cash.
Last May, U.S. Special Forces killed Abu Sayyaf, a nom de guerre, at his compound in Syria’s Deir Ezzour province. The raid also captured a trove of proprietary data that explains how Islamic State became the world’s wealthiest terror group.
Documents reviewed by The Wall Street Journal describe the terror group’s construction of a multinational oil operation with help from officious terror-group executives obsessed with maximizing profits. They show how the organization deals with the Syrian regime, handles corruption allegations among top officials, and, most critically, how international coalition strikes have dented but not destroyed Islamic State’s income.
Defense Secretary Ash Carter called the May 16, 2015, raid a “significant blow” against Islamic State and heralded the death of Abu Sayyaf, the terror group’s No. 2 oil executive.
In the 11 months since, U.S. and allied forces have launched hundreds more strikes against terrorist-controlled oil facilities and killed dozens of militants working in Islamic State’s oil and finance business. U.S. officials estimate that at least 30% of the group’s oil infrastructure has been destroyed, and taxes have replaced oil as the group’s largest profit center.
Daily oil sales in Syria and Iraq, though fallen, still total nearly $1 million. Two former Islamic State oil managers said the corporate structures created by Abu Sayyaf remained intact, including deals with businessmen linked to the Syrian regime.
Spreadsheets and Excel files show that Abu Sayyaf’s division contributed 72% of the $289.5 million in total Islamic State natural-resource revenues over the six months that ended in late February 2015.
The documents reviewed by the Journal represent only a portion of the files recovered in last year’s raid, which U.S. officials said has been useful for intelligence and military operations.
This account of how Abu Sayyaf built and operated his division of Islamic State’s oil business is based on the documents and interviews with five people familiar with him and his Syrian operation.
Turning to terrorAbu Sayyaf was born in a working-class neighborhood of the Tunisian capital Tunis in the early 1980s and named Fathi Ben Awn al-Murad al Tunisi. How he became an extremist is unclear. He left for Iraq after dictator Saddam Hussein was toppled in 2003 by U.S. forces and joined the jihadist group then known as al Qaeda in Iraq. Its goal was to repel U.S. troops and fight the Shiite-led government that took over Iraq.
In 2010, Abu Sayyaf married an Iraqi woman from a family also involved in the anti-American jihad. He took the name Abu Sayyaf al-Iraqi—literally, father of the sword bearer—reflecting his close ties with the jihad movement in Iraq and the nucleus of Iraq’s Sunni militants that included Abu Bakr al-Baghdadi, founder of Islamic State.
Islamic State had seized many of Syria’s best-producing oil fields and created its oil ministry known as the Diwan of Natural Resources by the time Mr. Baghdadi declared his so-called caliphate in June 2014. Their lightning advance overwhelmed other rebel groups that shared control of Syrian oil territory. The terror group had crushed the Iraqi army to take oil fields and territory around Mosul, Iraq’s second-largest city.
The head of the oil ministry, an Iraqi known as Haji Hamid, put Abu Sayyaf in charge of Syria’s best oil-producing provinces, Deir Ezzour and al Hakasah. Abu Sayyaf’s 152 employees included managers from oil-producing Arab-speaking countries who had joined the extremist group: a Saudi, who managed the top-producing fields; an Iraqi, who ran oil-field maintenance; an Algerian responsible for refinery development; and a Tunisian, who was in charge of refinery operations.
Abu Sayyaf set up his headquarters at the giant al-Omar field in Deir Ezzour, which was previously run by Anglo-Dutch major Royal Dutch Shell RDS.A 0.40 % PLC.
Islamic State moved swiftly to expand sales to friendly Iraqi and Syrian traders. It began accepting dollars instead of the Syrian pound, making it easier for the terror group to transfer funds abroad and pay for imported goods through its international network of money changers.
Syria’s state-controlled system of marketing oil to international buyers through pipelines and oil tankers was replaced by a cottage industry of small smugglers who bought oil at the fields and ferried it away by truck.
Islamic State retained many Syrian oil-industry veterans, in part by paying high salaries. Two workers at Abu Sayyaf’s operations said in interviews that experienced people were paid handsomely—from $160 a month for an accountant to $400 for a drilling technician, compared with Syria’s average monthly wage of $50. Islamic State’s treasury, known as Beit al-Mal, based pay on the number of dependents and slaves a worker had.
Everyone was afraid of Islamic State, said Ibrahim, a 36-year-old former oil worker. “Local tribes used to fight over the fields,” he said, but now all submit to the terror group.
Islamic State oil managers demanded cash payments from traders buying their crude, with security supervisors deciding who was trustworthy enough to count the money. They were warned against transferring funds via banks for fear Western intelligence agents would intercept the financial information.
Abu Sayyaf created a regimented, compartmentalized work environment unusual for the region. Syrian workers had long relied on social and family contacts to retain plum positions. Under Islamic State rule, foreigners supervised their work. Such tasks as accounting were assigned to two Islamic State operatives from outside the region to discourage embezzlement.
The responsibilities of Abu Sayyaf extended beyond oil. In September 2014, he was given custody of Kayla Mueller, a kidnapped American aid worker. Ms. Mueller, who had been sexually abused by Mr. Baghdadi after being taken hostage in 2013, was killed about five months later, U.S. officials said.
Abu Sayyaf was a strict and unpopular manager, said Ibrahim, who had worked in oil fields under his supervision. Employees were threatened with transfers to Iraq, he said, where they feared oil bosses who were even more extreme.
The areas around the fields became scenes of occasional horror, said the drilling technician who fled Syria last year: “You go to work and you find someone beheaded.”
Under fireAt a Sept. 19, 2014, meeting, the United Nations Security Council called for a crackdown on Islamic State’s oil business. Five days later, U.S. jets started bombing the group’s makeshift refineries in Syria.
By mid-October, the U.S.-led coalition reported hundreds of strikes a day against Islamic State, which was increasing its grip on Iraq’s Anbar Province and battling for the Syria-Turkey border city of Kobani.
Some allied strikes targeted Abu Sayyaf’s wells. On Oct. 13, the Pentagon reported hitting oil collection points in Deir Ezzour. He ordered repair crews into action. Memos dated on Oct. 17 from his Saudi deputy provided details of an estimated $500,000 in damage at several oil facilities.
His Saudi subordinate, Abu Sarah al-Zahrani, promised that teams would have the wells up and running within four to 14 days. Workers had to fortify derricks and fix broken valves and pipes. In follow-up memos, Mr. Zahrani provided photos of the repairs, including jury-rigged pumps and hoses.