Iraqi Kurds Start Selling Their Oil Over Baghdad’s Objections

Article Summary
Iraqi Kurdish delegations arrived in Baghdad to discuss the region's oil exports and deals with companies such as Exxon. Ali Latif writes the meetings may be “courtesies” rather than real attempts to resolve a dispute with Iraq over independent sales.  

Iraq’s ambassador to Washington, Jaber Habib, said that his government wants the White House to pressure oil giant Exxon mobil about its oil excavations and investments in the Kurdish region, which started exporting oil yesterday.

Iraqi Deputy Prime Minister for Economic Affairs Rose Nuri Shawis asserted that the presence of two Kurdish delegations in Baghdad, one representing the provincial government and the other representing the Kurdish political parties, has embarrassed and confused the talks.

Shawis said that the Kurdish government’s delegation held discussions with the Iraqi ministries of finance and planning and objected to the central government’s 2013 budget for excluding an allocation for the Peshmerga militia and for oil contracts.

Sources said that the visit of the two Kurdish delegations to Baghdad was no more than a courtesy and that there is no action plan to end the crisis between the province and the central government in Baghdad.

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Kurdistan started selling its oil on the international market under independent export agreements that challenged Baghdad’s control over Iraqi oil. The semi-autonomous region had signed exploration agreements with foreign oil companies last year. This step is expected to rile the central government, which is locked in a battle with Exxon Mobil.

Last year, the company signed a separate agreement with Kurdistan to explore for oil in six Kurdish areas. But the move also paves the way for more Kurdish independence.

Baghdad has long maintained that it alone has the right to sell Iraqi oil and gas. Kurdistan dealt with Trafigura and Vitol, two of the largest companies in the world, making it difficult for Baghdad to retaliate because it depends on these two companies to import refined products such as gasoline and diesel. If Baghdad decides to rely on others it will have to pay higher prices for fuel.

Trafigura bought the first shipment of Kurdish light oil — known in the industry as condensate — which is slated to be delivered in October through the mediator Powertrans.

The oil was shipped overland through Turkey at the beginning of the month. Vitol quickly followed suit and became the second-largest company to buy Kurdish oil without Baghdad’s consent. Vitol picked up a second 12,000 ton cargo of condensate for loading at the end of the month. At around $890 a ton, each shipment is worth over $10 million.

Iraqi officials say any deals independently signed with Kurdistan are illegal and trading Kurdish oil and gas products without the central government’s consent amounts to smuggling.

Iraq’s government spokesman Ali Dabbagh said that Iraq maintains its right to legally pursue all those who participate in smuggling the Iraqi people’s property locally or internationally, referring to the Kurdish oil sales to Swiss trading houses.

Trafigura declined to comment but Vitol confirmed that it has bought Kurdish oil that is yet to be delivered but did not comment any further on the deal.

Company spokesman Mark Ware said that the small purchase was bought in a public tender to be filled at the Toros terminal, in Turkey. In addition to supplying Baghdad with oil products, Vitol has also agreed to buy 22,000 barrels of oil per day of Iraqi crude in 2012.

Yesterday, Iraqi President Jalal Talabani expressed optimism about resolving the current political crisis in Iraq. Following a meeting in Baghdad with a delegation from the Kurdistan Regional Government headed by deputy head of the provincial government Imad Ahmad, Talabani issued a statement saying that the Kurdish delegation’s visit to Baghdad is a positive step toward resolving the problems.

Talabani stressed the need to put all questions, suggestions and demands in their Iraqi context and in light of the constitution and agreements, which are the basis of the government, and in a friendly manner, and to put the interests of a democratic Iraq above all else.

Iraqi Prime Minister Nouri al-Maliki invited a delegation from the Kurdistan Alliance to come to Baghdad and negotiate with the central government on how to end the disputes between it and Erbil, the capital of Iraqi Kurdistan, and to put the interests of Iraq above all else. He stressed the need for real action to develop solutions on the basis of the constitution, and not merely courtesies.

Yesterday, Maliki met with a Kurdish delegation headed by Barham Salih — who is deputy secretary general of the Patriotic Union of Kurdistan, which is led by Iraqi President Talabani.

The delegation included representatives of Kurdish parties in Kurdistan. After the meeting, Maliki said in a statement issued by his office that the meeting discussed various issues between the central government and the province and called on putting the interests of Iraq above all else.

Maliki stressed that everybody would benefit from a strong and cohesive Iraq and vice versa.

It should be pointed out that the two Kurdish delegations arrived in Baghdad Sunday, one of them representing the Kurdistan Regional Government and headed by Imad Ahmed, the deputy head of the provincial government, while the second represented the Kurdish political parties and was headed by the Deputy Secretary General of the Patriotic Union of Kurdistan, Barham Salih.

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