Yesterday U.S. District Judge Gray Miller in Houston added another thread to the battle over Iraqi oil exports during the last few months…
He said: “Kurdistan’s unauthorized export of oil over land – and later overseas – may violate Iraqi law, but it does not violate U.S. maritime law.”
If you remember, at the end of July the disputed United Kalavrvta Tanker, with $100 million worth of crude oil in tow, was forced to remain in limbo in the Gulf of Mexico when Nancy Johnson, another U.S. Judge, ordered Marshals to seize the cargo.
But since the tanker was more than 60 miles offshore, the Marshals and the Judge overstretched their bounds in attempting to seize the it.
And now that the Kurdistan Regional Government (KRG) can offload the oil and sell it to refineries on the Gulf Coast, it looks like the situation is out of Baghdad’s control.
Even though Baghdad, who has previously claimed the KRG isn’t allowed to sell any oil without their approval, has 10 days to appeal Judge Miller’s decision, many are unsure if the new, post-Maliki, government will continue the fight over the tanker.
If the newly formed government allows this shipment to be sold, they will open the floodgates for more Kurdish exports outside of their influence.
That is, unless they are able to stop the exports on their own turf.
Normally Baghdad exports oil in the Northern region via the Kirkuk-Ceyhan pipeline into Turkey…
But their battle with Kurdistan is over the KRG’s construction and implementation of another pipeline direct from their oilfields that sends their oil into the Kirkuk-Ceyhan pipeline, to the Turkish port at Ceyhan, and on ships like the United Kalavrvta where they – attempt – to sell it abroad.
The battle over Kurdish exports really starts in 2013 when their independent pipeline from the Taq Taq oilfield was built and began operation.
So if the central government wanted to stop the exports from Kurdistan, they could either negotiate with the KRG or simply enforce the sovereignty of their pipeline.
But the Iraqi government is unable to enforce their laws at the moment because they are busy completely reforming the executive branch of their government, while also dealing with the ISIS incursion through the northeast and central regions of Iraq.
Add to that, that the Iraqi military, based on news reports, seems to scatter and flee at the first sign of adversity in a fight, and you can see why Kurdistan won’t face too much push-back from Baghdad right now over their use of the Kirkuk-Ceyhan pipeline.
And as for Iraq’s threat against countries and corporations that facilitate independent Kurdish exports, there have been, to my knowledge, no major legal dust-ups between Turkey and Iraq.
So it looks as though Kurdistan will start exporting their own oil as long as Baghdad doesn’t dispute the shipment in the Gulf of Mexico during the next 10 days. And once the KRG rake in oil revenue and export more on their own, OPEC will lose another key source of income.
Until Next Time, Alex Martinelli