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Coast Guard Clears Tanker With Kurdish Oil to Unload

An oil tanker floating off the coast of Texas is waiting to unload its cargo of oil from the Kurdish region of Iraq after receiving clearance yesterday.

The U.S. Coast Guard finished the certificate of compliance exam yesterday for the United Kalavryta, anchored 60 miles (97 kilometers) southeast of Galveston, Andy Kendrick, a Houston-based spokesman for the agency, said in an e-mail. The ship is carrying Kurdish oil, Kendrick said later by phone. The cargo remains on board, a U.S. State Department official not authorized to comment for attribution said by e-mail.

The Iraqi Oil Ministry filed a complaint today in federal court in Houston claiming that Kurdish officials “misappropriated” more than $100 million worth of oil and exported it through a Turkish pipeline.

If a U.S. refinery accepts a shipment of the crude, it will send a signal to the rest of the world that it is acceptable to do business with the Kurdish government, said Carl Larry, president of Oil Outlooks & Opinions LLC. Officials in Baghdad have said the country’s oil revenue belongs to Iraq’s central government.

“It opens the door to some kind of breakup in that region where you could have a separate Kurdistan and Iraq,” Larry said by phone from Houston. “It’s definitely going to create that separation, and more people are going to recognize that and respect it.”

Too Deep

The ship can hold more than 1 million barrels of crude, according to data compiled by Bloomberg. Its draft is 16.3 meters, which is too deep to enter the Houston Ship Channel directly, said Clint Winegar, executive committeeman for the Houston Pilots. Instead, the tanker must offload its cargo onto smaller ships, an activity known as lightering.

“The United Kalavryta has completed all the standard procedures with the Coast Guard to conduct business here,” Kendrick said in the e-mail. “We are not imposing any additional criteria.”

Iraq’s semi-autonomous Kurdistan Regional Government is seeking to sell oil from its territory and claim revenue to help finance its effort for further independence from the national government. Officials in Baghdad have said the country’s oil revenues belong to the central government.

Oil producers are actively pursuing resources in coordination with the Kurdistan Regional Government. The Kurdish government expanded its control over the country’s resources in early June, when Kurdish Peshmerga armed forces took control of northern Iraq’s key oil hub, Kirkuk, after militants routed the Baghdad government’s army.

In June, Iraq had the highest estimated oil output of any member of the Organization of Petroleum Exporting Countries except Saudi Arabia. The Kurdistan Regional Government estimates the area holds 45 billion barrels of oil reserves.

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