US blow to Iraq’s control over its Kurdistan crude oil revenue

The semi-autonomous Iraqi Kurdistan region is vying to market more of its oil directly in order to help fund its ambitions for greater independence. Sebastian Meyer / Corbis

The United States delivered a blow to the Iraq government’s hopes of maintaining control of Kurdistan oil revenues after a tanker carrying US$100 million cargo of the fuel from the region was cleared to unload in Texas.

The United Kalavrvta was given approval by US coast guard officials to begin offloading its cargo off the coast of Galveston, Reuters reported, citing a coast guard spokesman.

The ship carried about 1 million barrels of crude, worth more than US$100m at international prices, the news agency reported.

Baghdad has claimed only it should be in charge of selling the country’s oil and other natural revenues.

But the semi-autonomous Iraqi Kurdistan region is vying to market more of its oil directly in order to help fund its ambitions for greater independence.

“The US is signalling to the Kurds that it is not against them and is signalling to Baghdad that it may hedge its bets unless Baghdad makes changes to the national budget,” said Shwan Zulal, the head of the London-based Carduchi Consulting.

To date, the US has maintained its support of Baghdad’s efforts to retain control over oil sales, worrying that greater power to the Kurdistan Regional Government could lead to the dismantling of Iraq. But the US’s commitment to Iraq’s prime minister, Nuri Al Maliki has been severely tested by his response to violence in recent months by Islamic extremists.

The United Kalavrvta is one of four significant shipments of oil by Iraqi Kurdistan since May. Oil exports have been ratcheted up since the opening of a pipeline linking with Turkey. Iraqi Kurdistan has set a target of pumping 150,000 barrels per day through the pipeline, which delivers oil from the Taq Taq oilfield. Officials hope to raise that to as much as 1 million bpd by next year.

The United Kalavrvta set sail from the Turkish port of Ceyhan last month, Reuters reported. The final location for the oil in the US remains unclear.

Baghdad has previously threatened to take legal action against buyers of Kurdish oil. But Washington has not put an outright ban on buyers in the US.

Speaking on Friday at a state department briefing, the deputy spokeswoman, Marie Harf, was quoted by the Wall Street Journal as suggesting the US's stance on Kurdish oil sales remained the same.

“Iraq’s energy resources belong to all of the Iraqi people. The US has made very clear that if there are cases involving legal disputes, the United States informs the parties of the dispute and recommends they make their own decisions,” she was quoted by the newspaper as saying.

Iraqi Kurdistan has the potential to significantly ramp up oil production.

Officials believe total reserves may span 45 billion barrels.

The regional government has become increasingly frustrated with Baghdad’s handling of the threat posed by Islamist militants. While the Islamic State, a set of Sunni extremists, has captured other parts of Iraq, the Peshmerga, the Kurdish military force, has defended Iraqi Kurdistan’s territory and taken control of disputed areas. They secured control of the Kirkuk and Bai Hassan oilfields on July 11, officials said.

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