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Kurdistan Regional Government (KRG) oil shipment stranded in Morocco (no buyer)

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A shipment of oil from the Kurdistan Regional Government (KRG) that passed through Turkey’s Ceyhan pipeline nearly two weeks ago is sitting without a 186101_newsdetailbuyer in a Moroccan port, according to ship tracking data from Thursday.

The shipment, which was sent to Ceyhan via a pipeline constructed by the KRG, has enflamed already high tensions between the KRG and Baghdad — in addition to straining Ankara’s relations with the latter. The Iraqi federal government took legal action against Turkey last month for facilitating the shipment. The issue is a source of concern for Washington, which said it does not support oil exports conducted without Baghdad’s consent.

The KRG opened its new pipeline last December and began shipping oil to Turkey, angering the central government in Baghdad and prompting it to cut the KRG’s 17 percent share of the national budget in January. The KRG has since stated that the cuts left it with no choice but to sell its oil independently. According to KRG Spokesman Safeen Dizayee, US Vice President Joe Biden called Iraqi Prime Minister Nouri al-Maliki repeatedly and requested that the KRG’s budget be reinstated. Al-Maliki told Biden that Baghdad would do so, but has failed to deliver on its promise, according to Dizayee.

There has been much speculation about the shipment’s final destination. Some analysts believed it was headed across the Atlantic while Energy Minister Taner Yıldız had said it was destined for Italy and Germany; now it’s halted in Morocco, which Dizayee said on Tuesday was its final destination.

Baghdad sues Ankara over shipment of Kurdish oil

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The Iraqi central government has announced that it plans to take legal action against Turkey over a shipment of oil from the Kurdistan region of northern 185454_newsdetailIraq in a statement from Iraq’s Oil Ministry on Friday.

The first shipment of oil from the Kurdistan region of northern Iraq has been shipped to Europe, according to a statement from the autonomous region on Friday.

This has created concern for the US, which does not publicly support exports without the approval of Iraq’s federal government, according to US State Department Spokesperson Jen Psaki, speaking to the press on Friday in Washington, D.C.

The Kurdistan Regional Government (KRG) said sales from the Turkish port of Ceyhan would continue despite opposition from the federal government in Baghdad, which had threatened legal action against any company involved in “smuggling” Iraqi oil.

“A tanker loaded with over 1 million barrels of crude oil departed last night from Ceyhan towards Europe,” read the KRG statement. “This is the first of many such sales of oil exported through the newly constructed pipeline in the Kurdistan region.”

The statement added that the oil revenue would be treated as part of the region’s share of the Iraqi national budget, which Baghdad has partially withheld since the start of the year as punishment for the Kurds’ moves to export crude independently. It did not specify the buyer or provide additional details regarding the completion of the sale.

The revenue from the sale was deposited into an account of Turkey’s state-run Halkbank. The KRG said it remained open to negotiations with Baghdad and would comply with United Nations obligations by setting aside 5 percent of the revenue in a separate account for reparations for Iraq’s invasion of Kuwait in 1990. Turkish Energy Minister Taner Yıldız said on Friday that the first cargo was sold in to the Mediterranean spot crude market.

In 2009, the northern Kurdish region attempted to ship its oil to the international market via a pipeline controlled by Baghdad connected to Ceyhan; however, the shipments were halted amidst payment disputes. Last year, the KRG began building a separate pipeline to Ceyhan, skirting Baghdad’s control. Iraq has the fourth-largest proven oil reserves in the world, and oil revenues account for just under 95 percent of the country’s budget.

Washington concerned over shipment

The shipment has created concern in Washington. “We don’t support exports without the appropriate approval of the federal Iraqi government, and certainly we do have concerns about the impact of those continuing,” said US State Department Spokesperson Psaki.

“Our most immediate concern is for Iraq’s stability. We’ve had a longstanding position on this issue; as you know, that has not changed. And Iraq is facing a difficult situation. We’ve been clear that it’s important for all sides to take actions to help the country pull together and avoid actions that might further exacerbate divisions and tensions. So we’ll be in touch with both sides.”

Psaki added that the State Department had not spoken to Baghdad regarding the matter, but that they would likely be in touch soon.