Tag Archives: Kurdish Oil Exports

Amidst sectarian flames, Iraqi security and marginalisation policies should be in the limelight, not Kurdish oil exports

As the Islamic State (IS) with the help of several Iraqi Sunni groups waltzed into Iraq seizing large swathes of territory, the goalposts in Iraq completely changed. Iraq as we know it ceased to exist.

Yet amidst the grave crisis in Iraq that Iraqi forces have failed to extinguish, Iraqi Prime Minister Nouri al-Maliki seemed more intent to turn focus away from the security nightmare and to increase the already wide gaps in the relations with the Kurds into an unsurmountable gulf.

Kurdistan Regional Government (KRG) and Baghdad have been at loggerheads for years over control of oil including revenue sharing and oil exports, however, matters took extra significance with IS breaking the status-quo.

Baghdad has threatened foreign companies dealing with KRG over oil for many years, but this has not stopped oil majors flocking to the region. Last month, Baghdad issued yet another statement threatening legal action against such foreign companies  “Any company that deals with or handles the cargo, we will not deal with it…Any discharge authorities, any port authorities, any party at all dealing with the cargo coming from Kurdistan without approval from the federal government, the oil ministry will take action with them.”

Only this week, the United Kalavrvta tanker, carrying 1 million barrels of oil, was anchored in international waters off the port of Galveston, Texas, after Baghdad launched a petition to a US court to seize the oil.

The US judge could not take any action as it lacked jurisdiction. In the meantime, the KRG launched its own counter legal proceedings to the Texas court warning “There is no merit whatsoever to the allegations of the Ministry of Oil; to the contrary, it is the federal government of Iraq that has acted wrongfully and that will have to answer to the KRG’s substantial counter-claims.”

KRG Minister of Natural Resources, Ashti Hawrami, further warned “The federal government cannot win, because our crude is legally produced, shipped, exported, and sold in accordance with the rights of the Kurdistan Region as set forth in the Iraqi constitution.”

After Baghdad threatened foreign companies with legal action for dealing with Kurdish crude, a determined KRG had threatened to sue buyers of Iraqi oil on the basis that they are complicit in violating the Iraqi constitution with Baghdad failing to pay the KRG share of the budget.

Meanwhile, in light of the latest dispute, the United States has maintained the same out- dated rhetoric. U.S. State Department spokeswoman Jen Psaki stated “Our policy certainly has not changed; we believe that Iraq’s energy resources belong to the Iraqi people and certainly have long stated that it needs to go through the Iraqi government.”

Even as Iraq has unravelled before their eyes, the US has clung to an outdated belief in the unity of Iraq without judging the disputes between the KRG and Baghdad in its historic context and the changing realities on the ground.

Deputy Spokesperson for the US State Department, Marie Harf, recently stated “There is no US ban on the transfer or sale of oil originated from any part of Iraq…Our policy on this issue has been clear, Iraq’s energy resources belong to all of the Iraqi people. These questions should be resolved in a manner consistent with the Iraqi constitution.”


The US one-sided policy that favours Baghdad in the hope of preventing the collapse of Iraq, fails to acknowledge that the Iraqi Hydrocarbon law has been gathering dust on the Iraqi political shelves since 2007. Furthermore, fundamental articles in the same Iraqi constitution that US constantly refers to have been ignored or neglected since 2005.

The Iraqi constitution does not need to be negotiated, only implemented and the US should support the Kurdish view as they have not gone beyond the legal terms stated in the constitution and it is Baghdad that has been unlawfully withholding the KRG budget entitlement.

The key question remains, what resolution over oil rights can be applied between the KRG and Baghdad after years of disputes and protracted negotiations? Kurdistan cannot remain idle with no funds for months upon end waiting for sentiment to change in Baghdad.

The disputes have been hastened by IS  but it often gets overlooked in international circles that the Kurdish share of the national budget, that Kurds allege now amount to $7 billion, have not been paid since January.

Tankers carrying Kurdish crude at times receive coverage like it is exported via the black market. This is the same crude that is pumped via official pipelines to the port of Ceyhan with full support of Turkey.

This is the same crude that would see Baghdad receive a lions-share (83%) under the terms of the constitution.  The matter is not a lack of revenue for Baghdad but the strengthening of the Kurdish hand with their new independent oil infrastructure and economic self-sufficiency.

The buyer of Kurdish crude becomes the object of much controversy and mystery, which is especially ironic giving that Iraq, is engulfed in sectarian flames and since it was same marginsational policies that Maliki attempts on the Kurds that reignited the latest Sunni insurgency.

In a blow to the KRG, LyondellBasell, recently confirmed that it had purchased the oil off Texas but would not accept delivery of the contested cargo. Their statement fell in line with the rhetoric of Washington, “We have cancelled further purchases and will not accept delivery of any of the affected crude until the matter is appropriately resolved.”

However, ultimately as more oil tankers are prepared for shipping, the Kurds will not back down and export Kurdish crude cannot be halted. The road ahead will have its own fair share of bumps, but when the Iraqi constitution is judged on its own merits, not just on the basis of Baghdad threats and the economic embargo on Kurdistan by Baghdad is taken into account, even the US will fail to justify its actions against Kurdish oil exports.

First Published On: Kurdish Globe

Other Publication Sources: Various Misc

First sale of Kurdish oil unveils a new era in the Kurdish national renaissance

The Kurdish national renaissance has assumed a number of key milestones in a short but remarkable period of time. The onset of the first independent sale of Kurdish oil stored at the Turkish port of Ceyhan, was another critical milestone that gives Kurdistan a new political, economic and strategic gear as its enters a new phase in its evolution.

The decision to export its oil to the international market, much to the dismay of Baghdad, came as the official Iraqi election results saw incumbent Iraqi Prime Minister Nouri al-Maliki attain the front foot in his quest for a third term.

As Kurdistan has continued its ascendancy in recent years, control of oil became a significant factor of dispute between the Kurdistan Regional Government (KRG) and Baghdad. Put simply, control of oil exports was the last remaining umbilical cord that Baghdad had over the Kurds.

This leverage was clearly on display when Baghdad failed to pay Kurdish salaries and the Kurdish share of the national budget as punishment for the Kurdish move to build and export oil to Turkey via its new independent oil pipeline.

Baghdad filed for arbitration against Ankara almost immediately at the International Chamber of Commerce, but in reality Turkey knew and openly accepted that the consequences with Baghdad were secondary to the strategic enhancement of their ties with the Kurds.

The storage capacity at Ceyhan was close to the limit, Baghdad appeared unwilling to give the Kurds the concessions it demanded and after months of negotiations a breakthrough was not about to take place anytime soon. All the while, the Kurds were in an ironic predicament. Kurdistan, with its billions of barrels of oil reserves and with millions of barrels stored in Ceyhan waiting to be sold to many international suitors, were at the mercy of Baghdad and couldn’t even pay salaries.

When you have masses of oil and wealth under your feet, which government in any part of the world would accept been dictated, undermined and held to ransom by a third-party?

Instead of waiting for hand-outs from Baghdad, the Kurds could soon surpass the value of their 17% share of the national budget with their own exports.

Turkish Energy Minister Taner Yildiz confirmed that 1.4 millions of oil was loaded via tankers and crucially backed further export of Kurdish oil as more oil is inevitably pumped.

In the same way as threats to independent export of oil, Baghdad continuously warned against oil majors entering the region and threatening to punish and blacklist such companies. In the end oil majors accepted the risks and after Exxon-Mobil entered the fray in 2011, a flock of majors simply couldn’t sit on the sidelines and waste unique opportunities.

In reality, Kurdistan wouldn’t have taken such a bold step without support not just from Turkey but also European powers over its constitutional rights. The oil was not sold on the black market but in an international, open and transparent market and to European customers.

Almost immediately after the first independent export of Kurdish oil, Kurdistan President Massaud Barzani went on a scheduled tour of Europe. The message from Barzani was clear – if Baghdad did not change its policies towards the Kurds, the Kurds could deploy other options it has on the table.

France clearly supported the Kurds in their move to market oil independently and according to Falah Mustafa, the head of Kurdistan Region’s Department of Foreign Relations, France “showed their willingness to support us in the next stage”.

It’s the not the first time that Kurds have threatened to take action against the centralist policies of Baghdad. After continuous failed promises by Maliki, the timing of the move echoed through the Iraqi political chambers that Kurds mean business and will match action with rhetoric.

The oil exports were crucially done before the establishment of the next government in Baghdad, affording the Kurds a more powerful negotiating position. They will not be duped into a new coalition with promises of allowing Kurdish oil exports. Instead the right of the Kurds to export oil becomes a prerequisite as opposed to a demand.

The Kurdish historical move is all the more significant that it was supported by Turkey, marking a dramatic turnaround in fortunes from a time when any notion of Kurdish nationalism was met with threats, harsh rhetoric and red lines.

Oil exports can only increase from these levels and serves as the fuel for independence – literally. Of course, Turkey acknowledges what oil export pipelines and sales means for the future of Kurdistan.

Yet, Turkey has so much to gain from a Kurdish friend with growing strategic and economic importance than an uncertain Baghdad leaning more towards Tehran, especially as the sectarian fires continue to rage in Iraq.

The Turkish position is even more ironic giving the U.S. resistance and unease of growing Kurdish independence, export of its oil and the growing ties between Erbil and Ankara that the US tried so hard to foster in the first place.

First Published On: Kurdish Globe

Other Publication Sources: Various Misc