A US-bound tanker carrying crude oil from Iraqi Kurdistan is being closely watched to see whether it makes an historic arrival at an American port, a development that would likely strain relations between Baghdad and Washington.
The United Kalavrvta tanker, which originated in Turkey, is due to arrive in the US on Saturday, but analysts note that it could still change course.
The website Marine Traffic reported on Saturday that the United Kalavrvta was scheduled to arrive at Teakwood port in Florida at 8 p.m. GMT on Saturday. The website’s data also noted that the AIS reported destination was Galveston, Texas. Reuters reported that its AIS Live ship tracking showed the ship was bound for Galveston.
If the ship docks in a US port it would mark not only the first arrival of Kurdish crude oil to the United States but an important victory for the Kurdistan Regional Government (KRG), which has faced challenges in finding buyers for its disputed crude oil.
Iraq’s Oil Ministry has threatened to sue anyone who purchases oil from the Kurdistan Region after the KRG struck deals to sell crude oil via Turkey without first receiving Baghdad’s approval. The KRG has accused Baghdad of using bullying tactics to stop its oil sales and maintains that it will only keep the 17 percent share of the oil revenue sales, in line with the Iraqi constitution.
“The government of Iraq will reserve the right to sue any company, refinery or trader that buys the Iraqi crude that KRG is illegally offering,” an official from Baghdad’s state oil marketer SOMO told Reuters on Thursday.
“Our foreign legal team is watching closely the movement of the vessel and is ready to target any potential buyer regardless of their nationality.”
The United States has warned against purchasing crude oil from Iraqi Kurdistan because of the potential legal implications from Baghdad. The United Leadership tanker carrying Kurdish crude appeared to be bound for the US in June but ended up in Morocco.
Marie Harf, deputy spokesperson for the State Department, told Rudaw that the State Department does not necessarily deem sales of crude oil from Iraqi Kurdistan illegal, but “there’s a legal dispute process here, an arbitration mechanism. There will be a legal ruling on it.”
Reuters reported that the ship has approximately 1 million barrels of crude which sells for about $100 million in the current market. The news agency reported that a crude tanker of Kurdish oil landed in Israel and was offloaded in late June, a claim the KRG denies.
Landing in the US would be a feat for Iraqi Kurdistan, which is trying to establish its own oil trade and is in dire need of revenue since Baghdad cut the region’s funding in January. But the question remains how Washington would respond if a tanker of Kurdish crude ended up in a US port — or if the ship would be allowed to dock.
While the United Kalavrvta could still change course, Marina Ottaway, a senior Middle East analyst at the Washington-based Wilson Center, told the Turkish Weekly Journal it could signal a change in US policy.
“The US realizes it needs to support the Kurdistan Regional government and the Peshmerga against the Islamic State (in Iraq and Syria, ISIS) so it will not take even more territory; secondly, it has not changed its policy permanently, but is sending a warning to (Prime Minister Nouri) al-Maliki — see what we can do if you do not become more cooperative; or thirdly, an oil company, or more than one, are willing to defy the US government to protect their interests,” she was quoted as saying.
Meanwhile, at a House of Representatives’ Foreign Affairs Committee hearing on Wednesday, Brett McGurk, deputy assistant secretary of state for Iraq and Iran, said Washington supports Iraq’s national oil exports “in a way that reinforces the overall stability of all Iraqi regions. We have an obligation to say when people ask that there is legal risk for taking oil without an agreement.”
He said the US works “very hard to broker an agreement” on oil between Baghdad and Erbil and had “a very good one as early as four months ago that would have gotten all of the oil out of the Kurdish north flowing and had revenues coming from the south to the KRG. That agreement didn’t succeed for a number of reasons, and one of which is that we’re in the middle of a high political season in Iraq. It was an election season.”
Some US officials appeared sympathetic to the KRG as it battles ISIS extremists in neighboring provinces and tries to operate on limited revenue after Baghdad cut its budget. McGurk noted that Iraq’s Parliament is debating a $120 billion budget, about $17 billion of which would go to the Kurdistan Region.
“We want to make sure those resources get to Kurdistan,” he said. “We have been very clear that the decision that prime minister (Maliki) has made to cut off salary payments of the Kurdish north because of his oil dispute is completely unacceptable. It should be reversed.”
Congressman Jeff Duncan, a Republican from South Carolina, questioned the Obama Administration’s policy discouraging the oil exports from the Kurdistan Region.
“I am concerned about our friends in the Kurdish region,” Duncan said. “I am concerned that they’re going to get surrounded. We didn’t lose a single American life in the Kurdish region during the Iraq war — not a single American, because they’re friendly.”
Gen. Martin Dempsey, chairman of the Joint Chief of Staff, also addressed the Kurdistan Region’s future last week. Speaking at the Aspen Security Forum on Thursday, he argued that a unified Iraqi government would be best for the Kurdistan Region “but that’s not discounting the fact if a unity government fails to form, or if government after it forms, doesn’t find a way to live up to the promises made by the previous governments, never fulfilled, then I think it could be a moment in their history when they choose to go their own way.”