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Iraq Fails To Seize Kurdish Crude Oil Bound for Texas

The saga of 1,032,212 barrels of crude oil continues. A week ago, a tanker carrying over a million barrels of crude oil from the Kurdish region of Northern Iraq arrived 60 miles off the Port of Galveston, Texas.

It had been a very unusual journey. The Kurdish crude was produced in the Kurdish region in December of last year, and pumped through a recently completed pipeline traversing the Kurdish region directly to Turkey. It was then loaded in Ceyhan, Turkey onto the vessel, the United Kalavrvta, operating under the flag of the Marshall Islands.  Although the manifest of the ship stated Augusta, Georgia as its port of call, then changed to Gibraltar, it arrived into the Texas Gulf of Mexico late last week.

On Monday, July 28, 2014, the Ministry of Oil of the Republic of Iraq (Baghdad), through its retained lawyers in Texas, rushed into Federal Court in Galveston on Monday and obtained a Federal Court order which instructed U.S. Marshals to seize the oil[1]. In the pleadings, the Ministry alleges that “the Cargo belongs to the Republic of Iraq in all the regions and governorates”; that “the Cargo was produced from wells drilled in the Kurdistan region and that without consent of the Ministry of Oil, the Kurdistan Regional Government (KRG) began pumping illegally produced crude oil through a pipeline running to Ceyhan, Turkey,” and that the KRG committed an “act of conversion” when the KRG ordered the crude loaded onto the tanker[2].

On Tuesday, July 29, 2014, a Federal Judge signed am order seizing the crude, but then turned around the next day vacating the order because the tanker is still in international waters where the U.S. Federal Courts do not have jurisdiction. Meanwhile, the Kurds hit back with a strongly worded letter to the Federal Courts[3] asserting misrepresentations on the part of the Republic of Iraq in their pleadings and also pointing out that the Iraq Supreme Court itself turned down a request from the Iraqi Oil Minister to issue a temporary injunction against the Kurdistan Regional Government from the sale of this oil[4].

So the saga continues and oil continues to flow through the Kurdish pipeline to the shipping terminal in Ceyhan.

Steptoe & Johnson PLLC is one of the only Western energy firms with an active practice in Iraq, headed up by the author and Sujey Kallumadanda, both of whom have lived and worked in Iraq.


[1] BRIEF-Iraq sues Kurdistan ministry of natural resources in U.S. over oil delivery

[2] Ministry of oil of the Republic of Iraq v. Ministry of Natural Resources of Kurdistan Regional Governate of Iraq et al, U.S. District Court, Southern District of Texas, No. 3:14-cv-00249

[3] Baghdad ‘Cannot Win’ in Tanker Claim, Hawrami Warns (http://rudaw.net/english/world/300720141).

[4] Supreme Court Ruling on Kurdish Oil Sales

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