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Homeland Security

Background Briefing on ISIL and Oil

Special Briefing
Office of the Spokesperson
Senior State Department Official
Washington, DC
December 4, 2015

MODERATOR: Great. Guys, without further ado, all of you or many of you know [Senior State Department Official] here to talk to us today on background as a senior State Department official about a topic that's been front-page news, especially in the last week or so: ISIL and oil. So given the time constraints, [Senior State Department Official] has got about a half hour. I'll let [Senior State Department Official] say a few words at the top and then we'll open it up to questions.

SENIOR STATE DEPARTMENT OFFICIAL: And I'll be brief at the top because I think you all have a lot – your questions are more important than my riff.

But while this is – as [Moderator] said, while this has been in the press for – specifically for the last couple of weeks with some of the Russian – with help from some of our Russian friends, this is an issue that we've obviously been looking at for quite some time. And as [title withheld], we look at the relationship between where – energy and national security and energy and terrorism and so on all around the world.

So when the conflict first began before ISIL even became a household name, we looked at the energy assets in Syria and in working – we had quite a bit of information about the fields that were operating in Syria before the conflict and what their capacity was, how they work. And if you – obviously, if you take a look at the areas of control – territory of control for the last 18 months and you do a fast-forward and look at who's controlled what territory, clearly, the energy infrastructure was something – both the natural resources in the ground as well as the infrastructure around them were of great interest to – throughout the conflict for those vying for control. And ISIL has done a good job of taking that control of a lot of the energy assets. So we've been looking at this for quite some time.

At the beginning of the conflict, what we wanted to do – what we did was take out the refining capability and took out most of the existing and mobile refineries that ISIL was utilizing that already existed as well as new ones that they were putting in place, these mobile ones that are – that you can put it together in pieces. And we took that capability out several months ago. We also attacked some of the oil collection points.

After – once we had – after the Abu Sayyaf raid, the so-called oil emir, which has given us more data than any other operation has ever given us, we were – we spent some time analyzing it from – cross-referencing it, first translating it and understanding it, and that gave us a better understanding of the operation and how they were – how ISIL was both monetizing as well as effectively managing the infrastructure. And I believe that the energy for ISIL is not only about revenue. It is also about symbols of control of territory, symbols of a state that are – that I believe are false, which means – even more important to address this.

So – but I don't believe that what some have suggested in the press of – oh, all you have to do is attack an oil field and that's the solution. It's a lot more complicated than that. If you attack the wrong assets, they can be rebuilt, and they take it out of commission for a matter of days, weeks, months, but not – doesn't have that degrading capability. So what we look to do is how do you both degrade the capability and decrease the revenue generation? And that's what we started doing several weeks ago already, as you've seen. One was going after the trucks, and the message there is that there is no safe part of the operation. If you go on Google Earth from a few months ago, you will see these massively long lines of trucks at collection points. If you go on Google Earth today, I don't think you'll see them. So it disrupts the operation and slows it down.

And in addition, it's to ramp up the targeting of more significant and strategic assets and infrastructure within the oil and gas operation. Additionally, the other aspect of it is what my colleagues at the Treasury Department did when they designated certain entities for the trade with the regime. That is obviously not going to stop the trade with the regime. It doesn't all happen through that one channel that was identified. It will take a combined effort of what we do from State, Treasury, DOD in order to bring that – to slow that down.

I'll say the last word that I'll say and then I'll open it up to questions, is the – we've seen a lot of discussion on smuggling from ISIL into Turkey. Russia has put together, I think, a website where they have a lot of this information with beautiful colored maps. We – our assessment is that there is not a lot of smuggling happening of any significant volume between ISIL-controlled territories and Turkey. Actually, if you want to talk about smuggling of oil products, we believe it's decreased over time rather than increased, and that's partly because of efforts of the Turks and partly because of our efforts in the air campaign that have targeted some of the supply chain lines.

When you talk about trucks and you talk about significant volume – I just want to pause on that for a minute – there's 200-250 barrels of oil per truck depending on quality of the truck and so on, but that's – that's sort of the range. If you talk about significant volumes of oil being smuggled into Turkey – so let's say significant – at the low end of significant would be 20,000 barrels a day – that's over a thousand trucks a day that would have to go through these areas. The economics don't make sense for that to happen, the evidence is not there to suggest that they are – that we would see – we would all, you and us, would see thousands of trucks going through this territory. It would have to cross several different areas of control from ISIL to Free Syrian Army to regime, et cetera, and across the border.

At every point, you would have to pay fees, so the economics of this are also – of this assertion are challenging. So I don't see a lot of merit in the argument that there is significant smuggling going on between the regime and Turkey, certainly not with knowledge of the regime. Is there some smuggling across the border? I'm sure there is. But it's small amounts and it's probably of a variety of products and these are areas that have had – probably had smuggling operations since the Roman Empire. So – but I don't think it's of any significant volume or – volume from a – volume of oil or volume of benefit financially.

I'll leave it there.

QUESTION: So where is it going?

SENIOR STATE DEPARTMENT OFFICIAL: Where is what going?

QUESTION: The oil.

SENIOR STATE DEPARTMENT OFFICIAL: Where is the oil if it's not going to Turkey? The oil is being consumed almost entirely inside areas of control of Syria and trading with the regime, and so it's almost entirely in that controlled territory.

QUESTION: And so how do they make money off of it if they're selling it to themselves?

SENIOR STATE DEPARTMENT OFFICIAL: ISIL is not selling it to itself as an organization. It is selling it to – into the economy. Conflict zones have economies of their own. People still need diesel, petrol for fuel for cars, rudimentary power generation. So if you look at the size of Syria from a population perspective, a classic in-conflict economy, it still needs that. This is not a volume that is outside of what is needed to supply this size of an area and population.

QUESTION: Do you have numbers for – I guess for production and diversion inside Syria (inaudible)?

SENIOR STATE DEPARTMENT OFFICIAL: I can't share a number of what their actual production is at the moment. We do track that, but it also – it fluctuates. So before an air campaign, after an air campaign, very different production levels. What you – what we can see is the number of stills and pits that are being dug into. So again, Google Earth is my friend sometimes, and you can see across territories that a year ago was just flat desert or flat open area and now is hundreds if not thousands of small pits, stills. And part of that is moving the operation from a 20th-to-21st century operation to a 17th century operation. But that shows you, again, the volume of oil that is being produced as well as the system of how it moves.

QUESTION: What is your estimate on the amount of trade between ISIL and the regime directly, about what percentage of ISIL's oil capacity does that take up?

And then secondly, in a briefing – I think it was in a briefing that Mark did earlier this week, he mentioned that a lot of the oil coming out from ISIL's controlled area is of low quality. So with that in mind, what's the target market or is there a middle person who's doing something to enhance the quality of it?

SENIOR STATE DEPARTMENT OFFICIAL: Let me start from the end because it informs the beginning. If you go back nine months ago when they – or maybe longer when they had the – when they had these refineries that I was referring to earlier – the word I should have used before is the modular. They have – they had – they put together these modular refineries, and the quality was much higher as a result. So they, at that point, still had the ability early in the conflict to produce the oil and using the – utilizing the old Syrian infrastructure that was there, which was not bad, and using existing refinery – new modular refineries that were all producing higher-grade, higher-quality products. And therefore you could get a higher price for it both internally and in trading with other parts such as the regime.

The low quality is because of the degrading effort that we are doing. So the success of our operation is not to take away their ability to refine – to produce. That can only be achieved from – by losing the territory, right? If you control the field – these are fields that almost produce on their own. But as long as you keep it low quality, what you can get for it is much lower, the interest of smugglers is reduced. And for the regime, they are largely looking at gas that they need from them and some petroleum products. And I don't have a number for you on the quantity, because that too we have seen significant swings in how much they're buying at any given point. And at some points it's – when they get a crunch in inside regime-controlled areas you'll see a spike up of volume, and then it will be reduced again.

QUESTION: But that's not traffic that's unusual in this – during the civil war. I mean, the – one of the oddities of the Syrian civil war has been that when the FSA takes a refinery or a gas transmission plant or something, it never disrupts the flow of fuel to the Syrian Government. In fact, the Syrian Government pays for it, maybe pays the salary of the people working there, and that's been going on well before ISIS was declared an enemy organization. I mean, the FSA worked with the Syrian Government in the same way too to provide services to cities. Isn't that the case?

SENIOR STATE DEPARTMENT OFFICIAL: So first we see this in – around the world in conflict areas where you have some oddities of trade that happens at the ground level of the people there because – and sometimes disrupting the flow would disrupt the flow not only to your enemy but to yourself as well. So it's hard to control flow direction in some cases. In other cases it's a revenue generator and you need the money. And in some cases you have boundaries that are not – that are created by battle and not by maps, and therefore you can have a refinery on one side with the distribution on the other, and vice versa. So you can control the power plant but not the distribution. So I have the power plant and you have the fuel, and we either both have no power or we both have power, because you can't do one without the other. So there is some element of that.

It doesn't mean, however, that my answer to the previous question isn't true --

QUESTION: No, I'm just saying --

SENIOR STATE DEPARTMENT OFFICIAL: -- that trade is happening and it --

QUESTION: But you haven't seen it change particularly over the last four years. I mean, an energy facility that's in the opposition's hands, whoever they may be, is often still providing fuel to the regime.

SENIOR STATE DEPARTMENT OFFICIAL: So that's right. There is a lot of trading with the regime, and ISIL has at some point had highs of trading with the regime. I think, actually, over time there's – it ebbs and flows not – the regime would prefer not to. What it – what we can see is that they prioritize other areas of self-supply and – but there is still that trade.

I was asked the question – again, I'm answering the question of what happens to this oil that's being produced. Where is it going? It's being utilized inside – my point is it's being utilized inside Syria and to some degree ISIL-controlled areas of Iraq. It is not going outside of there.

QUESTION: So --

SENIOR STATE DEPARTMENT OFFICIAL: And there is enough of a market – sorry.

QUESTION: So what do these Russian images show? Or are they completely fabricated?

SENIOR STATE DEPARTMENT OFFICIAL: The images are obviously not fabricated, but they're dated in some cases. They had an image that I saw that they were producing that was of the lines of trucks. These are lines of trucks in front of collection points. No doubt there are lines of trucks in front of collection points. That's why we attack them. And that was my point before, that there's no safe area.

That doesn't mean that those – their suggestion or I think inference is that here's a line of trucks and that's how it goes to Turkey. No, this is a line of trucks that collects the oil but then distributes it throughout Syria. That's the veins of the operation, if you will. What I have not seen is imagery of the border crossing with trucks crossing the border, and that's because I don't believe that exists.

QUESTION: At all? (Inaudible.)

SENIOR STATE DEPARTMENT OFFICIAL: Very – small numbers. I'm not saying at all.

QUESTION: Well, and if – and then, so in that small amount, is there any – do you have any concern that there are elements of the Turkish Government that might be profiting from them?

SENIOR STATE DEPARTMENT OFFICIAL: I have not seen any evidence to suggest that the Turkish Government is behind smuggling operations --

QUESTION: No the government. Elements of the government. (Inaudible.)

SENIOR STATE DEPARTMENT OFFICIAL: I have not – I don't have any information to suggest that. But again, it's also of such small – we believe that it's of small volumes that makes money and makes sense at the lower level of the territory where it's happening, the cross-border exchanges, but not at the level that makes a – that makes a much bigger difference.

QUESTION: The physical equipment that's been destroyed so far by coalition airstrikes, where has ISIL been able to get the replacement parts – the pipes, the concrete, the rebar – in order to rebuild it? Is that from existing inventory inside Syria? And if it's coming from outside the country, how is ISIL getting around existing sanctions?

SENIOR STATE DEPARTMENT OFFICIAL: So it's a great question, because --

QUESTION: And the mobile refineries.

SENIOR STATE DEPARTMENT OFFICIAL: Yeah.

QUESTION: Yeah.

SENIOR STATE DEPARTMENT OFFICIAL: So the mobile refineries was very early on in the conflict before there was a lot of understanding and blocking of smuggling routes and so on. So they were just bringing that stuff in across a variety of borders. That has stopped. That we haven't seen since we've taken out the mobile refineries and since we became aware of it. It's been months since we've seen any of that activity.

As far as the equipment that you need, it's important because that's part of the stepped-up approach here is to look at the infrastructure, the equipment and infrastructure that we've taken out. Some of it can be repaired by cannibalizing their own fields. And we see that whether you do that by aggressively taking out equipment, or in the case of Iran sanctions where you need replacement parts because the part broke down, what do you do? You can't import it because of sanctions, so you go to another field, you take a piece out of there and you put it in here and you start prioritizing your fields, and some will not be able to be operational.

That is why the capacity – the capacity of production for Syria is far higher than the production itself, because there's that delta they're not able to utilize the fields in the same way because they don't have the equipment. However, if you go to a service – an oil services company, they will tell you, "Here's what you need to operate a field." That's in optimal positions of the Western and modern era. But I can tell you from going around the world in areas that don't have access to that, you can do all – they – they're very creative in doing things that the by-the-book engineering doesn't actually provide for. So they've been able to do some things with some chicken wire and a pack of chewing gum. But there's a limit to that.

QUESTION: Right.

SENIOR STATE DEPARTMENT OFFICIAL: So they've been able to do it from within Syria and from areas that they have – remember we had a whole battle around the Baiji refinery. There was a – they controlled fields inside Iraq for a while before they lost that territory, the Ajeel fields. So that's a production capability that they had when they controlled that territory in Iraq. They've lost that territory since. But they've also been able to take equipment out of some of these places and re-use them in other places.

The stepped-up approach that we are engaging at the moment of taking out some of this infrastructure is a lot harder to replace, a lot harder to rebuild, and that's the goal. And I will say smuggling is – the oil smuggling from Syria or from ISIL-controlled territory into Turkey is what I was saying I don't believe happens. There is still smuggling that we are concerned about and look at and we want to do a better job at stopping, and that's – sometimes it's not the oil, it's the equipment. And we were also – while we're attacking, we're also making sure that we have a better control of equipment coming in in order to avoid what you just described.

QUESTION: Two questions. One is that ISIL has been controlling some of those areas over two years, 2013, even 2012. If – how about those years, '13 and '14, how was the smuggling of oil to Turkey then?

And the second question is: Talk about the Abu Sayyaf information and there are many credible reports published in the Western media that those reports show some of the important links between Turkey and Turkish government officials and ISIL. Can you talk a little bit about all those?

SENIOR STATE DEPARTMENT OFFICIAL: So first, on '13, '14 – I don't have information of – any credible information at all of Turkish Government and ISIL coordinated smuggling operations. And look, if you look to the history of this area pre-conflict, during the Assad, Sr., Hafez al-Assad, you will see that there was some smuggling happening because of the arbitrage. You have – and you have this black market emerge when one side of a border has subsidized prices and the other one has less subsidized prices, and you therefore have a liter of petrol being sold at 50 cents here and $2 on the other side. You just created a black market, right? Just by the fact that those two – those two facts.

So was – is there smuggling that happens that has gone on for over a hundred years on this? Yes. My argument is that there is no – there hasn't been, that I know of, a government-inspired smuggling operation from ISIL control at any given point. Overall, I will say that my discussions with my Turkish counterparts have been good on this issue. We have shared information. We are working to avoid it, and that's why we're seeing this decrease in the smuggling. It's a very long border. So that's as far as the 2013, 2014.

As far as the Abu Sayyaf information, I have – I've seen the areas of the information that are relevant to what I do for a living, which is going after the energy pieces, and in what I've – all I can tell you is that from what I've seen, I have not seen any of the rumors that are reported in some areas on the internet.

QUESTION: Can I ask, you said they were not coordinated – nothing – you haven't seen any coordinated effort between what's coming out of Syria and then the Turkish Government. But what about the henchmen, the middlemen? I mean, is it possible that some of that does find its way into the market through the henchmen, through the middlemen, and making the --

SENIOR STATE DEPARTMENT OFFICIAL: But I'm saying a much broader --

QUESTION: Well, there's about a dozen of them, right?

SENIOR STATE DEPARTMENT OFFICIAL: But I'm – what I'm saying is a much broader point, and that is that the volume itself of the oil being smuggled is extremely low and is decreased over time and is of no significant – significance from a volume perspective, both volume of oil and volume of revenues.

So is there some? There's always some. In everywhere part of the world oil smuggle – smuggling happens, in conflict areas more. But I don't believe – counter to what is being suggested in the press, I don't believe that there is significant smuggling between the two. So we can argue about the few dollars that are there, who's making them, and that. But to me, that's less important than the fact that we are taking a systematic approach and a strategic approach to degrade the ISIL operation and decrease significantly the level of revenues generated.

QUESTION: And where does this smuggled oil that goes to Turkey go after that? Just if –

SENIOR STATE DEPARTMENT OFFICIAL: So here --

QUESTION: The problem --

SENIOR STATE DEPARTMENT OFFICIAL: Yeah.

QUESTION: The reason that we're harping on this --

SENIOR STATE DEPARTMENT OFFICIAL: Yeah.

QUESTION: -- is the Russians came out on the record – unlike this – and presented all this stuff that they claim is evidence. And you guys --

SENIOR STATE DEPARTMENT OFFICIAL: So I – no, no, no – but we have said on the record – I will say on the record I do not believe there is significant smuggling between ISIL-controlled areas and Turkey of oil of any significant volume. I'll say that on the record. I'll say it now. I --

QUESTION: I'll check the spelling of your name now. (Laughter.)

SENIOR STATE DEPARTMENT OFFICIAL: I said it in a – at a congressional testimony three days ago. And I think that [Moderator] addressed that in [Moderator] comments, and DOD addressed it I don't know how many more times.

MODERATOR: Right.

SENIOR STATE DEPARTMENT OFFICIAL: So the reason that I'm – I was smiling when you asked the question, because I'm saying that there's very little smuggling going on, and you're saying, but what's being smuggled; where's it going?

QUESTION: Exactly.

SENIOR STATE DEPARTMENT OFFICIAL: But it's small, and it's going – it's – if you look at the overall – let's go back to what I said at the beginning. What is a – what is a real volume of oil where you start to say, okay, this is somewhat meaningful? A couple thousand barrels a day in a country like Turkey is – I wouldn't even recognize it in the overall because of the amount of consumption in Turkey, right? So let's say 20,000 barrels a day, right, out of the millions that they consume. And that still would be – for most companies, that would be a speck that they wouldn't even notice, but let's say. That's over 1,000 trucks a day. And I don't see 1,000 trucks a day; I don't see 500 trucks a day; I only see even half of that. So we're talking about very small amounts of oil.

Now as far as going into what – going into the pipeline – so people are going to risk their careers and everything else to make a few dollars. And remember, spectrum of the – the arbitrage revenue here is tiny. It's meaningful to a truck driver, right? But to a company or a government official and so on, it becomes less and less meaningful. And the more hands this goes through, the less revenue there is here. So you got to look at sometimes – I understand that the Russians came out on the record, but you got to also operate some common sense. They're talking about the arrows – the beautiful arrows that they have – it's a great PowerPoint – that are going in different directions. Look at through which areas of control on their own map of the different color coding. You have to pay a lot of money – every truck driver got to pay a lot of money, relatively speaking, to cross boundaries from territory to territory.

So this is not an economically viable operation. Especially when you have a market inside Syria, why would you risk your life and your purse? And the further you go as a truck, you make less money because you got to drive back empty, right? Taxi drivers in New York hate taking you to Newark, right? Got to come back empty.

QUESTION: How much – how much of an impact have the strikes had on their overall oil fundraising operation? We always hear --

SENIOR STATE DEPARTMENT OFFICIAL: When you say "fundraising" --

QUESTION: Well, I mean, the – their – how they make money, how ISIS makes money then funds its operations. How much of an impact have you had?

SENIOR STATE DEPARTMENT OFFICIAL: It's a good question. The first phase, when we took out the refineries, took a hit on the value per barrel, right, on the how much money they can get per barrel, because the quality went down. Once you took out the refining – and when I say "took out the refining," they're still refining. But you took out the quality refining and did stills and pits and so on which is much more rudimentary. So you – you degraded the value of the barrel.

The next step was by bombing some of the collection points is you're narrowing the scope of where the trucks would collect. So they're not collecting in as many places, which means trucks are standing in line for sometimes days, if not a week, waiting their turn to come and collect. So you degrade the operation then.

The next phase now that we're doing over the last several weeks is taking out strategic equipment and infrastructure that will make it difficult to produce the – to develop the oil, to produce it, take it out of the ground, and move it. And that will have – that already we are seeing – it's too early to say to – from a monetary perspective, but we're already seeing a very significant slowdown in the operation.

So if you have a line of trucks that's here, and you have a collection point, right, it's – it's not exactly efficient for any non-conflict area, but for a company that's not so bad, right? But if you now say the trucks can no longer feel safe and secure in waiting in this area – they have to disperse and every truck driver says, hey, you, don't get your truck near me, because the second they see a group, they're going to bomb it or potentially. So now you have isolated small groups all over the place. The time that they have to go in and waiting instead of one – instead of 5, 10 trucks at a time at a wellhead or at a collection point, now you have one at a time. Those – now you've – that slows down the operation. That's a monetary.

So it's not – it's – you have to look at it from the entire value chain of how ISIL does business in order to be able to understand that you're affecting the chain. So we've had a significant impact. Ask me again in three, four weeks from now when we've had more time to analyze and see what's lasting versus what's temporary adjustments, and I'll be able to give you a better answer on that.

QUESTION: Is there a --

QUESTION: (Inaudible) taking out the trucks?

QUESTION: (Inaudible) is ISIS making per day?

QUESTION: What do you make of the --

MODERATOR: Go ahead here and then --

QUESTION: What do you make of the ethical concerns of – taking out the trucks when it comes to the notion that some of these drivers are coerced by ISIS and may not be ISIS members themselves?

SENIOR STATE DEPARTMENT OFFICIAL: We are doing – we are going above and beyond what we can to minimize the loss of life in this, and I think the Pentagon has briefed that on --

MODERATOR: Yes.

SENIOR STATE DEPARTMENT OFFICIAL: -- we provide early warnings, enough time for the drivers to get away. And we have – remarkably have taken out a significant amount of trucks with a minimal loss of life.

QUESTION: How --

SENIOR STATE DEPARTMENT OFFICIAL: So I think we are paying attention to that.

QUESTION: You said, "We are doing above and beyond what we can." Is that possible?

SENIOR STATE DEPARTMENT OFFICIAL: No, I'm saying as far – (Laughter.)

QUESTION: (Off-mike.)

SENIOR STATE DEPARTMENT OFFICIAL: Fair enough. Fair enough. Yeah, you're right. You're right. Good – linguistically, you are correct. (Laughter.)

QUESTION: But there is a notion that State --

SENIOR STATE DEPARTMENT OFFICIAL: Thank you.

QUESTION: There is a notion that State has pushed the Pentagon in terms of the Pentagon having concerns and legal concerns about what it's doing in the strikes, and that State has been more eager to take risks or to green light strikes of these truck drivers that are moving out the oil.

SENIOR STATE DEPARTMENT OFFICIAL: When you say "there is a notion" --

QUESTION: Heard in the halls of the Pentagon.

SENIOR STATE DEPARTMENT OFFICIAL: I – it would – far be it for me to respond to the rumors in the halls of the Pentagon. This – we operate in a coordinated effort. We work very closely with our colleagues from the Pentagon, the White House, Treasury Department, others, on a regular basis. And so, again, I'm not going to respond to water coolers at the Pentagon.

QUESTION: Are the Brits, the French, and the Russians --

MODERATOR: A couple more questions, guys. Dave.

QUESTION: Yeah. Are the Brits, the French, and the Russians operating off the same target lists? Are they aiming for the same oil infrastructure?

SENIOR STATE DEPARTMENT OFFICIAL: This is a coalition effort, and we have a very --

QUESTION: The Russians aren't really in your coalition. They're parallel.

SENIOR STATE DEPARTMENT OFFICIAL: Oh, I thought you said the British.

QUESTION: The British, the French, and the Russians.

SENIOR STATE DEPARTMENT OFFICIAL: We're not going in with the Russians. The British and the French and others, to that part of your question, it's a coalition effort, and we are – we obviously share information with each other. And I would direct you to the Pentagon to ask on specifics of coordination.

QUESTION: Okay. I had asked because the first targets, when the Brits got into the operation, was oil. And the French, when they got into the operation in Syria, their first target was oil, as well. And I've heard in the halls of some embassies that they were keen to – (laughter) – they were keener than some Americans to make that the priority for their strikes.

SENIOR STATE DEPARTMENT OFFICIAL: Well, I think that they're coming at a time when we have been publicly briefing that we are addressing the energy infrastructure, so I don't think it should be a surprise to anyone that our coalition partners and us are involved in similar activities.

QUESTION: Okay, that's my warmonger question. But now my hippie question. Is there environmental blowback damage if you hit the well heads? Could you trigger environmental damage? We all remember the images from Kuwait when Saddam deliberately blew up oil wells.

SENIOR STATE DEPARTMENT OFFICIAL: Yeah, we are sensitive to that. And I actually think that the things that create the environmental damage are also less effective. So what we're trying to do is be strategic, is not bomb everything that is near an oil spot. But rather, look at what infrastructure is utilized most effectively by ISIL, harder to replace, rebuild, repair, and has the least degree of all kinds of collateral damage, environmental being one of them.

QUESTION: Do you have any --

QUESTION: Long-term --

MODERATOR: Last question.

QUESTION: (Inaudible) ISIS is making per day, would you estimate, in revenue?

SENIOR STATE DEPARTMENT OFFICIAL: I know that some people give estimates of numbers of dollars. I don't like it, because I think it changes radically. The numbers out there have – well, no, I'm going to leave it at that. I don't want to guess the revenues. People have talked about $500 million from the oil revenue a year.

QUESTION: That's revenue (inaudible) --

SENIOR STATE DEPARTMENT OFFICIAL: Right.

QUESTION: -- a day and the Pentagon says $1 million a day.

SENIOR STATE DEPARTMENT OFFICIAL: One and a – yeah I would say probably close to one and a half, one to one and a half. But that's – again, that's based on what's the price of oil. And I would say that the revenue – we have to do a reassessment on that in a month from now, now that we've had a significant effort, which means that the cost basis of the value per barrel has changed.

Remember, a truck driver now has to think very differently about do I want to engage in this operation than it did before. That usually means not only consideration when I talk with my family, "Is this a good business to be in," from a health perspective, but also if you decide to do it, we're going to charge more money for this. So it changes the modernization aspects of it. And --

QUESTION: Because since the bombing strikes have started from Incirlik a few weeks ago, the dollar amount hasn't changed significantly.

SENIOR STATE DEPARTMENT OFFICIAL: And you know that because?

QUESTION: You just said they were one to one and a half million.

SENIOR STATE DEPARTMENT OFFICIAL: No, I'm saying that's been the number that we've been using, is the – about one-and-a-half million. But I just said give me another few weeks. I can't analyze last week's effects today. It takes a little bit of time to see.

Also, remember that with any targets ISIL is going to take some time to adjust. And I don't know how they're going to adjust. And when they adjust – what I tell you – people talk about their ability to adapt, and people underestimate that we have an ability to adapt, as well. And so they will adjust to what we've done and what we're doing, and we will counter-adjust as well.

MODERATOR: Folks, last question here.

SENIOR STATE DEPARTMENT OFFICIAL: I hope this is --

QUESTION: Okay. The system you're describing here, as you break up this infrastructure and discourage them, what have you detected is the impact on the supply of fuel to the residents of the Islamic State-controlled area? Do they still have cooking gas? Are they having difficulty just carrying out normal transportation around the areas? What do you see as the impact on the local populations?

SENIOR STATE DEPARTMENT OFFICIAL: So, first, as I've described, over the last year you've seen lower-quality oil, which means that it's going to be a lot harder to utilize effectively, if you're – you all know here, in the United States, depending on what fuel you put in your car, it's going to affect the – your engine.

But there is still a functioning – relatively speaking, functioning – capability, but without a doubt, it's under strain. And it's much more difficult. And you've seen that the hours of power generation have been cut down. People are using less the grid and more generators, and so on. And that's part of a function of just --

QUESTION: Generators require fuel, too.

SENIOR STATE DEPARTMENT OFFICIAL: That's what I'm saying. So the grid goes down, you start using a generator – I mean, this is normal, I can tell you this in almost every conflict that I've been in. The grid gets affected first. Second, people move over to generators to supplement the grid. But then fuel costs go up. And what you are going to see with the campaign, the recent bombing campaign, is the cost of fuels go up. How much they go up, I don't know yet.

So, before you ask me how much, I don't know. And that affects – that has a knock-on effects on the ability to have power, fuel, et cetera, readily available. But they're still producing. It's still being distributed. It's just slower. And sometimes it doesn't mean that you don't have it; you just don't have it when you need it. So you have to wait – I used to have to wait two days to get my fuel, and now I have to wait six days or seven days or eight days.

But the idea that ISIL is an effective state is false. And I think you can see that by the fact that one of the basic elements is to provide power, water, fuel, cooking. And that's going to – that's been degraded, and it will continue to be degraded, their ability to serve as a regular, functioning state.

QUESTION: I have a very quick follow-up just in terms of personnel. You talk about truckers, fewer may be out there, so the price of fuel would go up. But in terms of trying to maintain this infrastructure in the wake of the bombings, where are the engineers? Where are the plumbers? Where are the electricians? Are they still there in the same numbers, or are they all disappearing and that makes it harder to keep the infrastructure going as well?

SENIOR STATE DEPARTMENT OFFICIAL: Well, I think that, for those who are considering recruitment efforts around the world by ISIL for engineers and all kinds of other, more skilled labor, which they need in order to operate these fields, I think that the – that is going to be a bigger challenge for them to recruit those folks as well.

Are they still there? We have – I think that it's now clear to anybody that oil – energy facilities and infrastructure are targets, and you should think twice before working there.

MODERATOR: Great. Thanks, everybody.

QUESTION: Thank you.

MODERATOR: Have a good weekend.



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