• 53 mins Syrian Rebel Group Takes Over Oil Field From IS
  • 3 days PDVSA Booted From Caribbean Terminal Over Unpaid Bills
  • 3 days Russia Warns Ukraine Against Recovering Oil Off The Coast Of Crimea
  • 3 days Syrian Rebels Relinquish Control Of Major Gas Field
  • 3 days Schlumberger Warns Of Moderating Investment In North America
  • 3 days Oil Prices Set For Weekly Loss As Profit Taking Trumps Mideast Tensions
  • 3 days Energy Regulators Look To Guard Grid From Cyberattacks
  • 3 days Mexico Says OPEC Has Not Approached It For Deal Extension
  • 3 days New Video Game Targets Oil Infrastructure
  • 3 days Shell Restarts Bonny Light Exports
  • 3 days Russia’s Rosneft To Take Majority In Kurdish Oil Pipeline
  • 3 days Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 4 days British Utility Companies Brace For Major Reforms
  • 4 days Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 4 days Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 4 days Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 4 days OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 4 days London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 4 days Rosneft Signs $400M Deal With Kurdistan
  • 4 days Kinder Morgan Warns About Trans Mountain Delays
  • 4 days India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 5 days Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 5 days Russia, Saudis Team Up To Boost Fracking Tech
  • 5 days Conflicting News Spurs Doubt On Aramco IPO
  • 5 days Exxon Starts Production At New Refinery In Texas
  • 5 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 6 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 6 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 6 days China To Take 5% Of Rosneft’s Output In New Deal
  • 6 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 6 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 6 days VW Fails To Secure Critical Commodity For EVs
  • 6 days Enbridge Pipeline Expansion Finally Approved
  • 6 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 6 days OPEC Oil Deal Compliance Falls To 86%
  • 7 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 7 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 7 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 7 days EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 7 days Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
Oil Markets Fear Iraqi Escalation

Oil Markets Fear Iraqi Escalation

The military operation by Iraqi…

Iraqi-Kurdistan Oil Dispute Will Be Settled In A Texas Court

Iraqi-Kurdistan Oil Dispute Will Be Settled In A Texas Court

For nearly half a year, the government of Iraq has been trying to get an American judge to hear its lawsuit against the Kurdistan Regional Government (KRG) in northern Iraq to gain control of 1 million barrels of Kurdish oil that Iraq says was illegally extracted from Iraqi territory.

Now US District Judge Gray Miller in Houston says Iraq’s lawsuit against the KRG can be argued in his court because the Kurds plans to sell the oil to an American customer.

This is the latest, and perhaps not the last, twist in the story over who owns the rights to oil in Iraqi Kurdistan. In fact, one major twist so far is that Baghdad and the KRG agreed in December that the Kurds could export as much as 550,000 barrels of oil a day from oilfields in their jurisdiction as long as nearly half that amount, 250,000 barrels, was under Baghdad’s control.

Related: Iraq Could Be Oil Market Linchpin

As important as that agreement is, however, it isn’t retroactive, so the 1 million barrels of Kurdish oil that have been biding their time since July in the Marshall Islands-flagged tanker United Kalavrvta off the Texas coast remain at issue. The tanker remains about 60 miles off Galveston, outside US waters, in the Gulf of Mexico.

Previously, Miller said he couldn’t hear Iraq’s suit because the alleged misappropriation of the oil occurred in Kurdistan, outside his jurisdiction. At that time, in December 2013, Kurdish oil officials used a pipeline originating in Iraq to ship the oil to the Turkish Mediterranean port of Ceyhan. It was then loaded on the United Kalavrvta and transported to the Gulf of Mexico.

Lawyers representing the Iraqi government adjusted their argument, focusing on the KRG’s direct involvement with an anonymous US buyer. As a result, Miller made a ruling Jan. 7 that meant the lawsuit was in his jurisdiction. “There are specific allegations that it has been sold in the U.S., and the sale of oil in the U.S. creates a direct effect in the US,” the judge ruled.

In his ruling, he dismissed the KRG’s argument that the issue was political, not commercial, and would be more suitably handled by a legal body other than US judiciary. The KRG's lawyers said this would force an American judge to take sides in a policy dispute that would be addressed more appropriately by Congress or the White House.

But in his ruling, Miller said Baghdad was merely seeking an interpretation of Iraq’s Constitution. “This does not involve political questions, but classic judiciary functions,” he wrote. “The heart of this dispute is to whom the text of the Iraqi Constitution grants the right to export oil, and whether the KRG converted the oil here. U.S. courts regularly interpret other countries’ laws, including constitutions.”

Related: Iraq’s Bright Oil Future Blocked By ISIS

At the same time, Miller said, in deciding the lawsuit, he will apply the laws of Texas covering stolen property because the purported buyer is an American.

Meantime, there’s yet another wrinkle in this unlikely saga. Since the case first came before the federal court in Texas, the value of the oil in the hold of the United Kalavrvta has dropped precipitously. At first the Kurds had planned to sell it at the going rate of about $100 per barrel at the time of the sale in July – in other words, for a total of about $100 million.

The price of oil is now around half that, and no matter who ends up with the oil, the profit won’t be nearly what it was when the United Kalavrvta set sail from Turkey.

By Andy Tully of Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News