New shipment of Iraqi Kurdish crude amid US court battle

A dispute between Erbil and Baghdad over the control of Kurdish oil escalated yesterday after reports emerged about another tanker being loaded with crude from the northern Iraq region.

As a dispute continues over a tanker carrying Iraqi Kurdish oil supplies off the coast of Texas, reports emerged yesterday about a Greek-flagged tanker being loaded with crude from the northern Iraq region.

A federal magistrate judge on Tuesday ruled that the US authorities would not be able to seize the cargo of US$100 million from the tanker unless it came closer to the Texas shore, according to a report by The Wall Street Journal. Judge Nancy Johnson was quoted as saying United Kalavrvta was not within the boundaries of the state or the court's authority.

Iraq’s government has threatened legal action against any buyers of the crude from the tanker. The vessel has been ensnared in a disagreement between Baghdad and the Kurdistan Regional Government over the ownership of oil from the semi-autonomous region. Baghdad says shipments from the region without its authority are illegal.

A fresh battleground in the dispute emerged yesterday after Bloomberg News reported that the Greek-flagged tanker Kamari was loading Kurdish oil stored at Ceyhan, the Turkish port.

Reuters reported that three ships in total were carrying Kurdish crude.

Oil exports from Iraqi Kurdistan have been ratcheted up since the opening of a pipeline link with Turkey. It has set a target of pumping 150,000 barrels per day through the pipeline, which delivers oil from the Taq Taq oilfield. Officials hope to raise that to as much as 1 million bpd by next year.

Reuters reported on Wednesday that chemicals firm LyondellBasell had bought two previous cargoes of Kurdish crude delivered to the US in May, citing US government data and industry sources. The two ships discharged their cargo of sour Shaikan crude without any legal hurdles.

Erbil has remained at loggerheads with Baghdad for years about control about control over the oilfields. Iraqi Kurdistan is trying to sell more of its oil directly to help fund its ambitions for greater independence.

The US has maintained its support of Baghdad’s efforts to retain control over oil sales, worrying that greater power to the Kurdistan Regional Government could lead to the dismantling of Iraq.

On Monday, Judge Johnson had ordered the cargo to be seized after the Iraqi government filed a complaint, arguing the oil was illegally smuggled from Kurdistan without Baghdad's permission. A day later she said the cargo could not be seized unless the tanker moved closer to shore.

She also said it was up to the governments of Iraq to determine the ownership of the oil.

"Seems to me this is not a matter for the US courts to tell the government — the governments — of Iraq who owns what," judge Johnson was quoted as saying by the Wall Street Journal. "This just seems way outside our jurisdiction."

* with agencies

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