Battle of wits for Iraqi-Kurdish oil

LyondellBasell, owned by Ukraine-born billionaire Leonard Blavatnik, has emerged as the mystery American buyer of Kurdish crude oil. Blavatnik, a US citizen who was born in Odessa to Russian-speaking parents, is now the world’s 33rd richest man after selling his stake in TNK-BP to Russian oil giant Rosneft.

The company in a statement said it will not be buying any more due to an ownership dispute. The statement from LyondellBasel, its first public comment on the imports, did not refer to any specific shipments and did not refer directly to Kurdistan.

It was not immediately clear if the company had also agreed to buy a cargo of some 1 million barrels worth $100 million that is currently on the tanker United Kalavrvta off the coast of Texas. That cargo, idle now for several days, is at the center of a legal dispute between the central government of Iraq and the Kurdistan Regional Government over who owns it.

A win for Baghdad

The decision to steer away from further imports is a win to Baghdad, which has stepped up efforts to discourage refiners across the globe from buying crude oil piped out of Kurdistan.

Both Iraq’s oil marketers and the US government have warned those who do business with the Kurdish government, including oil sales, that they risk legal action from Baghdad.

While Baghdad has shown new legal vigilance toward large-scale tanker sales, it has done little to discourage Kurdistan from selling piecemeal shipments hauled to Turkey via truck. In total almost 20 million barrels of combined Kurdish crude oil and condensate has been sold to international customers since 2012, including companies in Italy, Germany, the Netherlands, France, Israel and Brazil.

Legal fireworks

The long-running dispute has gained global attention after Baghdad filed a lawsuit in Texas to try to gain control of the United Kalavrvta’s oil. 

US authorities are set to seize the United Kalavrvta’s cargo of oil from Iraqi Kurdistan anchored off the Texas coast after a judge approved a request from Baghdad, raising the stakes in an oil sales dispute between Iraq’s central government and the autonomous region.

The tanker United Kalavrvta, carrying some 1 million barrels of Iraqi Kurdish crude oil worth more than $100 million, arrived near Galveston Bay but has yet to unload its disputed cargo.

The US judge’s approval of the request from Baghdad deals another blow to the Kurdistan Regional Government’s (KRG) attempts to establish its own oil sales, which are seen as a crucial step in the autonomous region’s push for independence.

Frank Uzuegbunam