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Iraq to Seize Kurdish Oil Exports

Baghdad to Seize Oil, Sue Companies

Written by Swagato Chakravorty
Posted January 14, 2013 at 4:32PM

Last Friday, the Kurdish regional government stated that it had begun shipping crude oil to Turkey over the past week. That, of course, displeased the Baghdad government, which has now declared that it may seize such unauthorized oil exports and sue companies engaged in such dealings.

The Washington Post reports that the threatening notification was first spotted on the State Oil Marketing Organization’s website. The move will undoubtedly put further pressure on already-strained relations between the Iraqi central government and that of the Kurds—coming shortly after both parties apparently were prepared to go to war and troops were deployed along the internal border just two months ago.

The crux of the matter is Iraq’s vast reserves of oil, who ends up managing them, and how. After the U.S.-led invasion of 2003, the Kurds have multiplied their crude options rapidly, setting up in excess of 50 deals with international oil giants like Exxon Mobil Corp. (NYSE: XOM), Chevron Corp. (NYSE: CVX), and Total S.A. (NYSE: TOT).

Baghdad has repeatedly expressed its disapproval of these machinations. In short, it wants all exports to be routed through pipelines under state control.

According to the website of the Iraqi Oil Report, more than 15,000 barrels per day have been shipped to Mesfin in Turkey—a rather tiny figure against Iraq’s 2 million-plus bpd of exports.

Just last month, the Kurds got into a spat with Baghdad over payments for oil exports through a Baghdad-run pipeline.

Iraq today holds the world’s fourth-largest reserves of conventional crude, at about 143.1 billion barrels, and revenues from oil constitute the overwhelming majority of Iraq’s budget.

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