Concerns heighten as Kurdish oil nears US port

Despite US long-standing concern over independent oil sales from Kurdistan, a tanker carrying crude oil from the autonomous region is closing in at a US port, according to ship tracking satellites. The United Kalavrvta tanker, which left the Turkish port of Ceyhan in June carrying oil delivered via a new Kurdish pipeline, is due to dock in Galveston, Texas.

The Kurdish Regional Government (KRG) has renewed its push for an independent state amid the latest violence roiling Iraq. Its relationship with Baghdad has deteriorated over what it sees as Maliki’s role in stoking the crisis and over the long-running dispute over oil sales.

Leading from behind

US have pressured companies and governments not to buy crude from the Kurdish Regional Government (KRG), but it has stopped short of banning US firms from buying it outright. A sale of Kurdish crude oil to a US refinery would infuriate Iraq, which sees such deals as smuggling, and raises questions about US commitment to preventing oil sales from the autonomous region.

US 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 Sunni Islamist insurgents that have captured vast swathes of the country. But it has also grown frustrated with Prime Minister Nuri al-Maliki’s handling of the crisis.

Energy diplomacy

Carlos Pascual, head of the US State Department’s Energy Bureau, said there had been no change of policy in Washington towards Kurdish independent oil sales, but he hoped the central government and the region could reach an agreement in time adding that without a deal, conflict between the two sides risked becoming “more acute”.

The KRG has been emboldened amid the latest crisis in Iraq to take control of the long-disputed oil city of Kirkuk and to increase its territory by more than third as Iraqi forces fled the onslaught of Sunni insurgents aligned with the Islamic State of Syria and the Levant (ISIL).

Baghdad’s counter offensive

Baghdad has threatened to sue anyone that buys Kurdish oil and blacklist them from deals for Iraq’s sizeable crude exports. Trading sources in Texas, New York, London and Geneva have been unable to identify the buyer of the United Kalavrvta tanker’s cargo. The United Kalavrvta was originally listed as sailing to Brazil, though without a specific buyer named in shipping fixtures.

“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,” an official from Baghdad’s central state oil marketer SOMO said adding that “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 tanker could still change course and head away from the United States to Mexico or another country in Central or South America.

The ship carries approximately 1 million barrels of crude, which would fetch more than $100 million at international prices.

Frank Uzuegbunam