Sale of Kurdish Oil to Europe Nations Angers Iraq Government

More than one million barrels of Kurdish oil were shipped from Turkey to Europe yesterday, Turkey’s energy minister and the Iraqi Kurdish administration said, prompting Iraq to try and block the transaction.

The oil was despatched from the Turkish Mediterranean oil terminal at Ceyhan at 10 p.m. yesterday, and was probably destined for Italy or Germany, Turkey’s Energy Minister Taner Yildiz said today. Iraq called the sale of the oil without the consent of its oil ministry “illegitimate.”

Iraq began arbitration against the government of Turkey and a terminal operator in Ceyhan to prevent the transport, storage and loading of crude pumped directly by the Kurdistan Regional Government to Turkey, according to an e-mailed statement from Iraq’s Oil Ministry.

The ministry and its official marketing company, SOMO, said yesterday that they “reserve the right” to embark on legal proceedings against companies loading Kurdish oil from Ceyhan without approval from authorities in Baghdad.

The Kurdistan Regional Government, which controls the semi-autonomous Kurdish region in northern Iraq, said the sale was in line with the Iraqi constitution.

Revenues will be deposited in a KRG-controlled account at Turkey’s Halkbank and “treated as part of the KRG’s budgetary entitlement under Iraq’s revenue sharing and distribution as defined” the 2005 charter, the regional government said. “The KRG will continue to exert its rights of export and sell oil independently of SOMO,” it said in a statement posted on an official website.

Federal Approval

“We don’t support oil exports from any part of Iraq without the appropriate approval of the federal Iraqi Government,” Marie Harf, a US State Department spokeswoman, told reporters in Washington yesterday.

The Iraqi Kurdish administration said it remains committed to negotiate in good faith with its counterparts in Baghdad to reach a comprehensive settlement on oil issues. It said “5 percent of the sales revenue will be set aside in a separate account for reparations” to meet Iraq’s continued United Nations obligations.

To contact the reporters on this story: Selcan Hacaoglu in Ankara at shacaoglu@bloomberg.net; Ali Berat Meric in Ankara at americ@bloomberg.net

To contact the editors responsible for this story: Andrew J. Barden at barden@bloomberg.net Mark Williams, Caroline Alexander

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