On the Mosul outskirts, the IS group’s Iraqi oil refining hub – recently seized by Iraqi forces – shows how the militants used savvy management to fuel their killing machine. A patchwork of rudimentary oil refineries – set up under IS and now abandoned – in the Khafsah area south of Mosul, Feb. 23, 2017. (PATRICK OSGOOD/Iraq Oil Report) At the peak of its hold on Iraq, the self-proclaimed Islamic State (IS) militant group transformed a barren expanse of desert, about four miles south of Mosul, into the black heart of its oil industry.The low-slung hills of Khafsah are now a wasted landscape of mangled metal and explosive ordnance. But until recently this was the site of about 600 primitive oil refineries, which generated millions of dollars’ worth of fuel and revenue that powered the IS group’s murderous operations.Iraq..