KRG reasserts US crude export plans

OREANDA-NEWS. The Kurdistan Regional Government (KRG) plans to direct new oil export cargoes to the United States despite ongoing litigation that caused buyers to cancel deliveries and idled an oil tanker for months.

Both the Iraqi Oil Ministry and KRG have been locked in US litigation over such shipments since July. The KRG maintains its plans in a letter to a federal court in Houston, Texas, added to the record by the oil ministry.

Mounting costs and delays associated with the ongoing court case led the KRG last month to redirect the United Kalavrvta from its position in the US Gulf coast to port in Gibraltar.

"However, just as the KRG continues to export oil to markets around the world, the KRG will soon dispatch additional shipments of oil to the United States," attorney Harold Watson wrote to the court. "The KRG will also continue to assert and protect its rights to control, develop, manage, export and sell oil from the Kurdistan region."

The United Kalavrvta, which arrived in late July about 60 miles off the coast of Galveston, Texas, returned to the Mediterranean in January for "special surveys designed to maintain its class certification," the letter read. The ship was loaded last May in Cehyan, Turkey. The Iraqi Ministry of Oil in July sought to seize its cargo as it approached the US Gulf coast, insisting the crude was shipped and marketed without the government's consent and in violation of the country's constitution.

A lightering company canceled its contract to unload the cargo and at least two previous buyers of KRG crude said they would no longer take shipments until the status of the crude was resolved. US representatives of the KRG and Iraqi oil ministry traded maritime law claims in a federal court in Houston as negotiators in Iraq attempt to resolve the conflict. The KRG has refused to appear in an Iraqi court on similar claims.

But federal and KRG representatives have worked to bolster ties. A federal oil and gas committee signed a preliminary agreement earlier this week to implement an interim export agreement with Kurdistan reached in December. The KRG committed to provide Iraqi crude marketing arm Somo with 250,000 b/d of production from KRG-controlled fields and exported by pipeline to Ceyhan. The KRG will export up to 300,000 b/d more crude produced by the federally-controlled North Oil by the same route.

KRG prime minister Nechirvan Barzani is expected to hold further talks with the Iraqi government on the interim agreement. Both sides must still agree on an oil revenue sharing law and work toward a final deal.