America is buying disputed Iraqi Kurdish Crude Oil

atlssa · Jul 27, 2014

America is buying disputed Iraqi Kurdish Crude Oil — Middle East News — Medium
and Baghdad threatens to sue as Kurdish oil tanker nears U.S. port
Published: July 27, 2014

A Marshall Islands-flagged tanker ‘United Kalavrvta’ carrying crude oil from Iraqi Kurdistan is hours away from arriving at a U.S. port in Texas, according to ship tracking satellites, despite Washington’s long-standing concern over independent oil sales from the autonomous region. It would be at least the second time a U.S. company has taken delivery of oil that the Baghdad government says was smuggled from the country.

The 600-mile long Kirkuk-Ceyhan Pipeline. It is Iraq’s largest crude oil export line.

The ship, which carries approximately 1 million barrels of crude (worth more than $100 million at international prices), took on the disputed oil in Turkey, through a pipeline from the Kurdish oil fields in northern Iraq that bypasses the Iraqi state oil company.

The semi-autonomous government in Kurdistan argues the exports are within its rights under Iraq’s federal constitution, but Prime Minister Nuri al-Maliki insists all Iraqi oil must be brokered by the state oil company.

The shipment is significant because it is one of the first from the new pipeline through Turkey, which Baghdad emphatically calls a smuggling operation. To make matters more tense with Baghdad, the Kurds siezed northern oil fields from ISIS control to keep them out of the hands of the Jihadist insurgents who control the northwest of the country.

Maliki’s government, though, is too busy dealing with the ISIS insurgency to take action against the Kurds, and the new parliament has yet to form a government or confirm Maliki as the next prime minister.

A sale of Kurdish crude oil to a U.S. refinery would infuriate Baghdad, which sees such deals as smuggling, and raises questions about Washington’s commitment to preventing oil sales from the autonomous region.

Washington has expressed fears that independent oil sales from Kurdistan could contribute to the break-up of Iraq as the government in Baghdad struggles to contain the Jihadist insurgents that have captured vast swathes of the country.

Hypocritically, Washington has pressured companies and governments not to buy crude from the Kurdish Regional Government (KRG), but it has stopped short of banning U.S. firms from buying it outright.

Analysts have said that if there is a buyer for the oil, and no one stops the sale, it would represent a major step toward independence for Kurdistan. This is something the United States, at least officially, has opposed, insisting instead on maintaining a unified Iraq. The fear is that an independent Kurdistan in Iraq could re-ignite Kurdish separatist movement in Turkey and Iran.

On Thursday (July 24) an official at SOMO, Iraq’s central state oil marketer, reiterated that it would sue any company buying Kurdish oil and blacklist them from deals for Iraq’s sizeable crude exports.

“The government of Iraq will reserve the right to sue any company, refinery or trader that buys the Iraqi crude that KRG is illegally offering,” said an official from Baghdad’s state oil marketer SOMO.

“Our foreign legal team is watching closely the movement of the vessel and is ready to target any potential buyer regardless of their nationality.”

The interesting fact about buying disputed Oil is that not to long ago, the US Navy seized a North Korean ship off the Mediterranean island of Cyprus, stopping an attempt by a Libyan militia to sell its shipload of crude in defiance of Tripoli.

It is a shame that when looking to its own interests the U.S. government does not behave the same way. It just proves all America wants is oil!