Iraq Vows Action Against Kurdistan Crude Sales

Source: Reuters 5/24/2013, Location: Middle East

Iraq vowed to take legal action against companies to halt Kurdistan's crude oil sales to Turkey. "Any oil that is taken out of the country and payments not made to the Iraqi people through the central government is considered to be taking Iraq's national wealth," said Iraqi Deputy Prime Minister Hussain al-Shahristani.

"There are a number of means the Iraqi government is considering, and any responsible government would have the same priority to protect the wealth of the people," said the deputy prime minister, who is also an adviser to the prime minister on energy matters and was attending a conference.

Crude exports from the Taq Taq oilfield in the autonomous northern region of Kurdistan to Turkey's Mersin port started at a trickle in early January and have risen to just over 40,000 barrels per day (bpd).

They are expected to hit around 60,000 bpd by the end of June as trucks unload at the neighbouring Dortyol terminal in southern Turkey.

Oil lies at the heart of a feud between the central government and Kurdistan. Baghdad says it alone has the right to control exports and sign deals, while the Kurds say their right to do so is enshrined in Iraq's federal constitution.

In retaliation, Iraq's State Oil Marketing Organisation (SOMO) sent letters warning customers not to touch any oil that had not been marketed by SOMO and the ministry intends to sue producers, namely Anglo-Turkish firm Genel Energy.

Turkish intermediary Powertrans has found a steady stream of customers in Northwest Europe for its crude and condensate sales. Major oil firms with interests in southern Iraq have opted not to participate in tenders.

Germany's Select Energy lifted the first two Taq Taq cargoes in April. The grade is a light sour crude, a highly sought after quality.

Select is loading a third larger 80,000 tonne cargo.

Austria's OMV, already black-listed by Baghdad due to upstream stakes in Kurdistan, also bought one cargo in May, sources said.

Iraq's central government says Kurdistan is expected to provide 250,000 bpd towards Iraq's 2013 oil export target of 2.9 million bpd.

For more information about related Opportunities and Key Players visit Iraq Oil and Gas Projects

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