Iraqi Kurds ship oil through region's own pipeline

2014-05-23 20:18

Baghdad - Iraq's self-ruled northern Kurdish region said on Friday that it has made its first oil shipment through its own pipeline to the international market, bypassing the central government in Baghdad, which insists that it has the sole right to develop and market the country's natural resources.

Baghdad's Arab-led government and ethnic Kurds have a long-running dispute over the right to develop and export natural resources, and both rely on different interpretations of Iraq's constitution. Baghdad maintains the Kurdish region's over 50 separate energy deals with Western companies are illegal.

In 2009, the three-province Kurdish region officially started pumping crude oil to the international market through a Baghdad-controlled pipeline that goes through Turkey's Ceyhan Mediterranean port, but shipments were interrupted many times over payment disputes. Last year, the Kurds constructed a separate pipeline and started pumping to separate storage facilities at Ceyhan in January.

More than 1 million barrels were loaded on Thursday night in Ceyhan and shipped to Europe, the Kurdish Ministry of Natural Resources said in a statement. It didn't name the buyer or give other details on how the sale completed.

"This is the first of many such sales of oil exported through the newly constructed pipeline in the Kurdistan Region," the statement said.

Baghdad has warned that it will not give the Kurds their 17% share in the national budget and will sue the buyers if they go ahead with the exports without central government approval. Officials in Baghdad did not immediately respond to calls seeking comment.

In Ankara, Turkish Energy Minister Taner Yildiz told reporters that the exact quantity of the exported crude was around 1.05 million barrels and the shipment was headed "probably to Italy and Germany".

The latest move is expected to increase tension between Baghdad and Kurds on one side and between Baghdad and Turkey on another. Iraq's fugitive Sunni Vice President Tariq al-Hashemi, who faces numerous death sentences over alleged terrorism-related charges that he has denied as politically motivated, has taken refuge in Turkey.

The development also comes amid political negotiations to form a new government after 30 April national elections. Shi'ite Prime Minister Nouri al-Maliki's bloc emerged as the biggest winner, securing 92 seats in the 328-member parliament, but it failed to gain the majority needed to govern alone.

The Kurds could seek to use their political leverage to persuade al-Maliki to offer concessions during the oil negotiations.

Iraq's oil revenues are usually deposited in an account in New York, known as the Development Fund of Iraq, from which the United Nations withholds 5% of the revenues to compensate Kuwait for the damages it suffered during Saddam Hussein's 1990 invasion.

The Kurdish regional government said it would deposit revenues from the sales in its account with the state-run Turkish Halkbank. It also said it would set aside 5% of the revenues in a separate account to contribute toward Kuwait reparations. It was not immediately clear how those funds would be handled.

Iraq holds the world's fourth-largest oil reserves, with some 143.1 billion barrels. Oil revenues make up nearly 95% of Iraq's budget.