Kurdistan Oil & Gas Development

[Anthea]

Wealth Daily

Kurdish Oil Ban: What it Means
Crisis in Iraq Continues
By Joseph Cafariello Wednesday, August 13th, 2014

Divide and conquer – the most effective tactic of any insurrection – seems to be giving the Islamic State of Iraq and Syria (ISIS) all the momentum in its push to confiscate Iraqi territory.

Exceptionally violent, vicious and murderous though they are, unintelligent they are not. They know precisely how to vanquish the Iraqi nation: by pushing like a wedge through the center of the country and dividing it in half along its two ethnic and religious lines – separating the Sunni Kurds to the north from the Shiite Iraqis to the south.

Rather than set aside their differences and unite against a common foe who is threatening to tear their nation apart, the two regional factions in Iraq are playing right into ISIS’ hand by quarrelling between themselves. And of all issues, they are arguing over the last thing they can afford to fight about – oil, and who has the right to sell it.

The Iraqi central government in Baghdad had banned all sales of crude oil originating from Iraq’s northern Kurdistan region – this at a time when money is sorely needed to combat the ISIS faction’s advance. Meanwhile, the well-funded ISIS armies are taking advantage of Iraq’s disunity to capture more ground.

To understand why Iraq is deliberately restricting its own oil exports and forgoing sorely needed revenue, we need to understand the nation’s division along ethnic and religious lines.

The Kurdistan Issue

While Western nations are accustomed to a blend of ethnicities and faiths, much of the old world prefers segregation along ethnic and religious lines.

Unfortunately, when Western powers redrew maps and borders in the middle east at the end of the First World War, little notice was taken of this segregationist preference. When the then defunct Ottoman Empire was cut up into pieces, they simply drew new lines on the map irrespective of the region’s ethnic and religious cultures.

One such culture – the Kurds – saw their acenstral territory of Kurdistan divvied up amongst Turkey, Iran, and newly formed Syria and Iraq. Down to this day, Kurdistan still straddles multiple national states.

Yet the story for the Kurds living in northern Iraq is made ever more tense by religious differences with the majority of Iraqis to the south. Where the Kurds to the north practice the Sunni branch of Islam (as do most Muslim nations, including Turkey, Syria, Saudi Arabia, Egypt and others), the majority of Iraqis in central and southern Iraq are of the Shia branch of Islam (as is Iran).

For decades, all Kurdish peoples from Turkey to Iran have been pressing their cause for an independent state - which over the years has resulted in Kurds being massacred in Turkey and Syria, and gassed by Saddam Hussein in Iraq.

Their cause took a giant leap forward during the first Gulf War in 1992, when Allied troops battling Saddam Hussein’s forces established bases in Kurdish territory in northern Iraq. After the war, the Iraqi Kurdistan region emerged as an autonomous entity with its own local government and parliament – known as the Kurdistan Regional Government, or KRG - a development which greatly strengthened Kurdish ties with the West.
While Turkey had once feared that an independent Kurdistan would result in the loss of a major portion of its southeastern territory, the recent ISIS insurgence seems to have swayed Turkey’s stance.

“On 28 June 2014, Hüseyin Çelik, a spokesman for the ruling AK party, made comments to the Financial Times indicating Turkey's readiness to accept an independent Kurdistan in northern Iraq,” reports Wikipedia. Turkey likely favors an independent Kurdistan in northern Iraq as a buffer against an ISIS controlled central Iraq should the revolution be victorious.

Western governments would also like to see an independent Kurdistan in northern Iraq, whose pro-West leanings would grant the West a convenient location from which to keep tabs on the rest of Iraq and even neighboring Iran.

It seems the only ones opposed to an independent Iraqi Sunni Kurdistan to the north is the Iraqi Shiite government in Baghdad in the south. Hence the ban on Kurdistan oil exports in an effort to cripple the KRG’s economy and squash its quest for independence.

Baghdad’s Ban on KRG Oil Sales – What are they Thinking?

Remember that autonomous regional government in Kurdish northern Iraq established in 1992 after the First Gulf War? The KRG was fortunate enough to inherited one of the richest crude oil deposits on the planet.

“KRG-controlled parts of Iraqi Kurdistan are estimated to contain around 45 billion barrels of oil, making it the sixth largest reserve in the world,” informs Wikipedia.

To help it tap those bountiful reserves, in “July 2007, the Kurdish government solicited foreign companies to invest in 40 new oil sites,” which call was enthusiastically answered by a host of oil producers, including “Exxon, Total, Chevron, Talisman Energy, Genel Energy, Hunt Oil, Gulf Keystone Petroleum, and Marathon Oil”.

The KRG then started signing direct contracts with foreign oil companies, such as Exxon in 2011, bypassing Baghdad’s authority over the oil fields in northern Iraq. The KRG took another step in defiance of Baghdad by signing direct agreements with foreign governments, such as with Turkey in 2012 for an exchange of Turkish refined petroleum for KRG crude oil.

Needless to say, the Iraqi government in Baghdad was none too pleased with the KRG’s disregard for its authority. The steady stream of money flowing into Iraqi Kurdistan would soon empower the increasingly rebellious Kurds to proclaim their total independence. So Baghdad recently decided to hit the KRG where it can do the most harm – its pocket book.

The Iraqi government in Baghdad has started filing law suits against foreign buyers of KRG crude, asserting that such purchases are illegal without Baghdad’s expressed consent, and that any taking of possession of KRG crude would be considered theft of Iraqi goods and property.

The only two American buyers of Iraqi Kurdish crude oil (that we know of, anyway) – namely LyondellBasell Industries N.V. (NYSE: LYB) and Axeon Specialty Products – have now stopped receiving oil from the KRG.

“In light of the dispute over the rights to sell crude oil originating from the Kurdish region of Iraq, Axeon will not purchase or accept delivery of any of the affected crude oil until the matter is appropriately resolved,” the latest refusal noted.

Reuters reports at least $240 million worth of Kurdish crude oil remains undelivered in U.S. and Moroccan ports since June.

“Until the legal dispute [between the Iraqi government and the KRG] is resolved, it seems unlikely the Kurds will be able to find U.S. buyers willing to take cargoes,” Richard Mallinson at Energy Aspects in London assessed. “It is not yet clear that the KRG and a new federal government [in Baghdad] will be able to set aside their disagreements and reach a deal over Kurdish oil exports any time soon.”

Meanwhile, ISIS keeps advancing across central Iraq, pushing north toward Iraqi Kurdistan and south toward the capital of Baghdad,

Cooler heads might at least see the need to set aside any differences and unite against a common foe, which

U.S. President Obama is urging both sides to do.

“The White House on Tuesday said Iraqi Kurdish President Masoud Barzani had pledged to work with Iraq's new leader, Haider al-Abadi, who is due to replace Prime Minister Nuri al-Maliki,” Reuters reports. “Abadi called on politicians to end crippling feuds.”

Yet the still ongoing ban on KRG oil purchases imposed by Baghdad are resounding proof the Iraqi government just isn’t listening.

If Iraq is to stand a chance against ISIS, soldiers and weapons will be required, which in turn will require money, which in turn requires the sale of crude oil. Yet a wealthier KRG is a more independent KRG. In an effort to keep a hold on the northern third of its territory in Kurdistan, Baghdad seems willing to lose the central third of its territory to ISIS.

What Baghdad fails to realize is that unless it bands together with the northern Kurds to fight ISIS – which is already on the capital’s door step – it will lose a lot more than just the north, but the entire Iraqi nation.

Joseph Cafariello

http://www.wealthdaily.com/articles/kur ... means/5297

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Rudaw

Financial Times: Turkey Has Called on US to Lift Kurdish Oil Ban

Turkey has called on the US to lift obstacles to the sale of oil by Iraq’s cash-strapped Kurds to help in their war with Islamic State (IS/ISIS) militants, London’s Financial Times reported.

The daily quoted a senior but unidentified Turkish official as saying, “This is urgent: ISIS is now selling its oil, but the Kurds are not allowed to sell their oil,” a reference to oil fields and installations captured by the militants in eastern Syria and near Mosul in northern Iraq.

“Our message for the US is always very clear,” the newspaper quoted the Turkish official as saying. “There is a dispute within Iraq on how to interpret the constitution (over rights to oil revenues) but if outsiders take sides it will not benefit either Iraq, nor energy security, nor future political conciliation.”

The United States, siding with the central government in Baghdad, has opposed the Kurds selling their oil independently, fearing that would embolden the Kurdistan Region’s bid to declare statehood and break up Iraq.

Since last week, US jets have been involved in air strikes against IS positions near Erbil, and momentum has been building in Europe to get behind the Kurds, with France sending arms and the European Union considering doing the same.

The Turkish official claimed ISIS was selling cut-price oil to the Syrian government, with allegations of widespread oil smuggling from the jihadist-controlled region, notably to Turkey itself.

He compared this to the obstacles faced by the KRG in selling its oil, when it is locked in an escalating war, is hosting at least a million war refugees, and has been cut off from the national budget since February over the oil row.

FT reported that this week, Axeon, a US-based refiner, said it would not proceed with a Kurdish buy because it was “controversial” – the latest in a series of rebuffs for tankers circling the globe with shipments of Kurdish oil.

With few buyers for its oil, one Kurdish official said the KRG was now working with Ankara on increasing storage capacity at the port of Ceyhan and elsewhere in Turkey, where the oil is piped before being loaded on to tankers, and was also looking at storing offshore, the FT reported.

Turkey itself is most keen to buy Kurdish oil, which it needs to fuel its growing economy.

http://rudaw.net/english/world/140820141

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Reuters' EXCLUSIVE:

Iraqi Kurds sell third major oil cargo, fourth heads to Croatia

Kurdish crude from Ceyhan delivered by Kamari tanker

* Total sales approaching $350 million

* Cargoes sold in June and July off Israel, Malaysia

* Kamari made ship-to-ship transfer off Malta Thursday

By Julia Payne and David Sheppard

LONDON, Aug 15 (Reuters) - Iraqi Kurdistan has delivered its third major cargo of crude oil out of a Turkish port and a fourth is sailing to Croatia, showing the autonomous region is finding more buyers despite legal pressure from Baghdad and setbacks in the United States.

The Kurdish Regional Government (KRG), whose peshmerga forces are being supported by U.S. airstrikes in their battle against the radical Sunni militants of Islamic State, has been in a long constitutional fight with Baghdad over independent oil sales.

But while some shipments have been tied up by diplomatic and legal pressure from Baghdad, an increasing number are now finding buyers. Around $350 million in oil sales have been completed or are under way from shipments sent via the KRG's new pipeline to Turkey, a Reuters analysis of satellite tracking data shows. The first vessel of pipeline crude sailed in May.

"The sales process is standardising and our order book is growing," a senior official in the Kurdistan Regional Government said when asked about the sales.

"While we are fighting a war with the Islamic State we're also facing an economic war from Baghdad."

Baghdad has cut the KRG's budget since January over the oil sales dispute, saying it has sole authority to export crude from the country.

One cargo of Kurdish crude aboard the United Kalavrvta tanker has been sitting off the Texas coast since late July after Baghdad asked a court to seize the vessel. The ship remains in international waters off the U.S. coast, unable to unload. The KRG is appealing against Baghdad's request.

Another vessel carrying Kurdish crude from Turkey's Mediterranean port of Ceyhan, the United Leadership, has been anchored off Morocco for more than two months without unloading.

But a little over two weeks ago, the 1 million barrel Suezmax Kamari tanker loaded Kurdish oil at Ceyhan before sailing to a point just under 200 km (125 miles) off the Israeli and Egyptian coasts.

Reuters AIS Live ship tracking showed the ship was fully loaded, based on its draft in the water. After turning its satellite tracking off on Aug. 1, the ship reappeared four days later sitting far higher in the water - indicating it had unloaded its cargo of disputed oil.

It was not possible to determine which port the oil had been delivered to or who the buyer was. In June a cargo of Kurdish oil that sailed from Ceyhan aboard the United Emblem Suezmax tanker was delivered into Israel after being transferred at sea to another ship. The KRG has denied selling oil to Israel "directly or indirectly".

Another cargo, again carried by the United Emblem tanker, was transferred to a second vessel off the coast of Malaysia late last month. The buyer remains unknown.

Iraqi Kurdistan has been selling small volumes of oil trucked into Turkey since 2012 but has faced fiercer opposition from Baghdad since its own pipeline to Ceyhan started at the turn of the year. It now carries around 120,000 barrels per day to the port.

The KRG has said it plans to increase oil sales to around 1 million bpd by the end of next year, which could potentially give it enough economic clout to speed a push for independence.

CROATIA BOUND

This week the Kamari has again loaded crude at Ceyhan, sailing to Malta where it executed a ship-to-ship transfer to a smaller vessel called the United Carrier, a shipping source familiar with the matter said and ship tracking showed.

The vessel is managed by Greece-based Marine Management Services, the same company that runs the Suezmax tankers lifting Kurdish oil.

The United Carrier is now sailing towards a port in Croatia. The Omisalj port imports oil for Croatia's refineries, which are partly-owned by Hungary's Mol Group, a company that has invested in oilfields in Iraqi Kurdistan.

A spokeswoman for Mol Group in Hungary declined to comment.

The Croatian government, which owns the 100,000 barrel per day INA refining company jointly with Mol Group, was not available to comment on Friday - a public holiday in Croatia.

Based on international prices above $100 a barrel, total Kurdish crude sales from Ceyhan would total around $350 million, even if some tankers have been slightly discounted.

This week a senior Turkish official called on the United States to lift hurdles to the sale of crude from Iraqi Kurdistan, the Financial Times reported, saying Kurdistan was facing an enemy that was boosting its operations through oil sales.

Islamic State militants are selling oil from oilfields and refineries they control to local communities and smugglers, U.S. intelligence officials said on Thursday.

"We appreciate the Turkish line of thinking and we believe other countries should also support oil sales from Iraqi Kurdistan," the senior KRG source said.

"If they are going to trust Kurdistan to fight ISIS (the previous name of Islamic State) they should not expect us to do it with one hand tied behind our back."

On Thursday Nuri al-Maliki finally bowed to pressure and stepped down as Iraqi prime minister. There are hopes the new prime minister, Haider al-Abadi, will negotiate an oil sales agreement with the KRG, though some have cautioned he has previously backed Maliki's stance on the issue.

The latest signs point to the KRG continuing to step up its oil sales. The United Dynamic, another Suezmax tanker managed by the same shipping firm as the other Kurdish oil vessels is also now sailing towards Ceyhan, according to Reuters AIS Live.

On Friday the United Dynamic, which is currently empty, was off the northern coast of Tunisia. It is due to dock at Ceyhan on Aug. 21. (Additional reporting by Igor Ilic in Zagreb; editing by Keiron Henderson)

http://uk.reuters.com/article/2014/08/1 ... 1Q20140815

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Bloomberg

Brent Falls as Iraqi Kurds Retake Mosul Dam; WTI Drops

Brent crude slumped to the lowest level in almost 14 months after Kurdish and Iraqi forces seized control of Iraq’s largest dam from Islamic State militants. West Texas Intermediate also declined.

Brent slid as much as 2.3 percent. Kurdish forces and government anti-terrorism units took over the Mosul Dam after receiving air support from the U.S., reversing gains made by the Sunni-Muslim insurgents in the north, according to Iraqi military spokesman Qassim Ata. Prices also fell as Libya’s oil production increased.

“The anti-ISIS forces are gathering strength and making progress,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “The threat has peaked, and the risk premium is declining. People are pulling out of the market.”

Brent for October settlement slid $2.23, or 2.2 percent, to $101.30 a barrel at 12:46 p.m. New York time on the London-based ICE Futures Europe exchange. It fell as far as $101.11, the lowest since June 26, 2013. The contract rose $1.46 on Aug. 15, the most since July 17. The volume of all futures traded was about 6.8 percent below the 100-day average for the time of day.

WTI for September delivery decreased $1.39, or 1.4 percent, to $95.96 a barrel on the New York Mercantile Exchange. Volume was 6.2 percent below the 100-day average. The October contract of the U.S. benchmark crude was at a discount of $7.73 to Brent for the same month on ICE. The spread closed at $8.21 on Aug. 15, the widest since June 24.

U.S. Airstrikes

Islamic State fighters forced the Kurdish forces, also known as peshmerga, to retreat earlier this month as they swept toward Erbil, the capital of the semi-autonomous region of Kurdistan. In response, President Barack Obama authorized airstrikes on Aug. 8 to protect U.S. personnel and threatened Iraqi minorities.

Earlier this month, militants from Islamic State, a breakaway al-Qaeda group, took control of the Ain Zala and Batma oil fields, which together have an output of 30,000 barrels a day, in northern Iraq. The Sunni militants last month occupied the Qayyara oil field north of Baghdad.

Taking back the dam is “an indicator that the Kurds may be able to take back the oil fields,” said James Williams, an economist at WTRG Economics, an energy-research firm in London, Arkansas. “There is more optimism about the situation in Iraq. It is a good step forward, but it’s not a turning point to drive the ISIS out.”

Spared South

The conflict in Iraq, the second-largest producer in the Organization of Petroleum Exporting Countries, has spared the south, home to about three-quarters of its production. The nation pumped 3 million barrels a day in July, according to data compiled by Bloomberg.

In Libya, also an OPEC member, production increased to 540,000 barrels a day as the port of Es Sider prepared to ship crude, according to Mohamed Elharari, a spokesman for National Oil Corp.

Output has expanded from 415,000 barrels a day on Aug. 14. Es Sider was one of two export terminals handed over last month by rebels seeking self-rule in the eastern regions.

Brent rose on Aug. 15 after Ukraine said its forces attacked and partially destroyed a military convoy entering the country from Russia. Ukrainian Foreign Minister Pavlo Klimkin met his Russian counterpart Sergei Lavrov for more than five hours of talks in Berlin today, as they sought to ease tensions.

Safety Valve

The talks haven’t produced a resolution, with progress made only on humanitarian aid deliveries, Lavrov told reporters after meeting with his Ukrainian, German and French counterparts.

“Overall the picture is going to be stabilizing,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston. “People took positions on Friday as a safety valve.”

Also on the Nymex, gasoline futures dropped as much as 2.3 percent to $2.6374 a gallon, the lowest since February. Ultra-low sulfur diesel dropped 1.6 percent to $2.8022.

U.S. gasoline demand dropped to 9.02 million barrels in the four weeks ended Aug. 8, the lowest seasonal level since 2012, according to the Energy Information Administration.

Retail regular gasoline prices averaged $3.454 a gallon yesterday, the lowest level since February, according to Heathrow, Florida-based AAA, the largest U.S. motoring group. The peak driving season typically runs through Labor Day, which falls on Sept. 1 this year.

“It seems unlikely that an increase in road trips over Labor Day weekend would reverse this summer’s gas price decline based on current conditions,” Michael Green, a Washington-based AAA spokesman, said by e-mail last week.

To contact the reporter on this story: Moming Zhou in New York at mzhou29@bloomberg.net

To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net Stephen Cunningham

http://www.bloomberg.com/news/2014-08-1 ... drops.html

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Gulf News

Turkish energy minister says Iraqi Kurdistan oil exports continue

Taner Yildiz says 6.5 million barrels of Iraqi Kurdish crude oil had been shipped to world markets via Turkey’s Ceyhan port since exports began

Ankara: Turkish Energy Minister Taner Yildiz said on Monday 6.5 million barrels of Iraqi Kurdish crude oil had been shipped to world markets via Turkey’s Ceyhan port since exports began and that a seventh tanker was being loaded at the terminal.

Yildiz said crude flow on the Kirkuk-Ceyhan pipeline had been halted as of Monday due to maintenance work. Flows through the 120,000 barrel-per-day (bpd) pipeline began at the end of 2013 but the first cargo was not loaded until May.

The Kurdish Regional Government (KRG) in northern Iraq, whose peshmerga forces are being supported by US air strikes in their battle against the radical Sunni militants of the Islamic State, has been in a long constitutional fight with Baghdad over independent oil sales.

Some shipments have been held up under diplomatic and legal pressure from Baghdad, but an increasing number are now finding buyers.

Iraq has the world’s fourth-largest oil reserves and is targeting exports of 6 million bpd by 2017, which would see it overtake its neighbour and fellow Opec member Iran.

Yildiz also said Iran had not made a tangible proposal for the sale of natural gas at a discounted price to Turkey, adding that Turkey would now await a decision from the international court of arbitration on pricing.

Turkey depends on imports for almost all of its natural gas needs and Tehran is its most expensive supplier.

Turkey’s state-owned Petroleum Pipeline Corporation (BOTAS) applied to an international court of arbitration in 2012 for a ruling on Iran’s gas pricing. The case is still pending.

http://gulfnews.com/business/oil-gas/tu ... -1.1373656

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Reuters

Exclusive: Iraqi Kurdistan oil pipeline export capacity to double
By Humeyra Pamuk and Orhan Coskun

The capacity of Iraqi Kurdistan's independent oil pipeline will almost double to at least 200,000 barrels per day by the end of this month, helping the semi-autonomous region increase exports and revenue, industry sources and officials said.

Oil revenues are a lifeline for the Kurdish Regional Government (KRG) in northern Iraq, whose peshmerga forces are being supported by U.S. air strikes in their battle against the radical Sunni militants of Islamic State.

"Work to increase the capacity will probably be completed by the end of this month. Once it is completed, pumping can increase to up to 220,000 barrels per day (bpd)," one Turkish official told Reuters.

Industry sources also said the capacity of the pipeline to Turkey, which began operating at the start of this year, was set to rise to around 200,000-220,000 bpd from 100,000-120,000 bpd before the flow stopped for upgrade work.

One of the sources said capacity could climb to 250,000 bpd in two to three months' time.

"The crude flow is set to restart when the upgrade work is finished, but the 200,000 bpd to 220,0000 bpd of crude flow will be dependent on the rising oil production in northern Iraq," one official said.

A joint venture of Anglo-Turkish company Genel Energy and Sinopec's Addax Petroleum is working to ramp up production in the Taq Taq oilfield, Iraqi Kurdistan's largest, to 140,000 bpd by the end of this month.

After months of fruitless talks with Iraq's central government, the KRG in May started to export crude on its own independent pipeline to the Turkish Mediterranean export terminal of Ceyhan.

The KRG pipeline is located at a distance from the areas controlled by Islamic militants.

The move has infuriated Baghdad, which claims the sole authority to manage Iraqi oil. It has cut allocations to the KRG in the budget and has tried to block KRG's oil sales by taking legal action. [ID:nL6N0QL31Q]

So far, 7.8 million barrels of Kurdish oil have flowed through the independent pipeline, of which 6.5 million have been loaded onto tankers for export.

The Kurds have managed to load seven export cargoes from Ceyhan, according to Turkish Energy Minister Taner Yildiz.

EXPORTS FINDING CUSTOMERS

The tricky part for Iraqi Kurdistan has so far been to find buyers to export the oil. Baghdad's persistent efforts to block sales initially deterred some customers.

Iraqi Kurdistan delivered its third major cargo of crude oil out of Ceyhan and a fourth was sailing to Croatia on Friday.

Around $350 million in oil sales have been completed or are under way from shipments sent via the KRG pipeline, a Reuters analysis of satellite tracking data shows.

One cargo of Kurdish crude aboard the United Kalavrvta tanker has been sitting off the Texas coast since late July after Baghdad asked a court to seize the vessel. The ship remains in international waters, unable to unload, while the KRG has appealed the case.

The KRG has said it plans to increase oil sales to around 1 million bpd by the end of 2015, which could give it enough economic clout to speed a move to independence.

Meanwhile, a drive earlier this month by Islamic State militants through northern Iraq to the border with the Kurdish region has alarmed Baghdad, drawn the first U.S. air strikes since the end of American occupation in 2001 and sent tens of thousands of Yazidis and Christians fleeing for their lives.

"We provide a lifeline to this region; we boost the economy. Our machines have not stopped; all our staff both expats and locals are at work. Our target is to improve production," Onder Tekeli, general manager of Taq Taq Operating Company (TTOPCO), told Reuters during a short ride inside the facility.

On Tuesday, Iraqi forces launched an offensive to drive Islamic State fighters out of Tikrit, but they halted their advance after facing fierce resistance, officers in the operations room told Reuters.

The Sunni militants' advance towards Arbil, which followed a shockingly fast seizure of Iraq's third-biggest city Mosul in June, have stunned the international community and prompted Western oil companies including ExxonMobil and Chevron to evacuate staff.

The fall in oil output from the region has been negligible, however.

(Reporting by Humeyra Pamuk and Orhan Coskun; Editing by Nick Tattersall and Jane Baird)

http://www.reuters.com/article/2014/08/ ... 4K20140819

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Oil Voice

WesternZagros declares commercial discovery at Kurdamir

WesternZagros Resources Ltd. (TSX VENTURE:WZR) and its co-venturer, Talisman (Block K44) B.V. ("Talisman"), have submitted a Declaration of Commercial Discovery ("DoC") to the Kurdistan Regional Government ("KRG") for the oil and gas discovery in the Kurdamir Block. A phased development plan, outlining future production wells, facilities and supporting infrastructure, is under preparation for submission to the KRG.

"This is a long anticipated, important milestone for WesternZagros as well as the Kurdistan Region. We estimate the Kurdamir block to hold nearly 1 billion barrels of oil equivalent (BOE) of contingent resources on a mean basis. In addition, the three stacked reservoirs in Kurdamir hold significant upside potential, of an additional estimated 1.6 billion BOE of prospective resources on a mean basis. Declaring Kurdamir as a commercial discovery is another key step as we continue our evolution from an explorer to a producer and towards generating cash flow," said Simon Hatfield, WesternZagros Chief Executive Officer.

Future expansion phases will be determined by the success of the first phase of the development drilling campaign. The co-venturers are advancing plans for the first horizontal development well with an anticipated spud date in Q4 2014, subject to KRG approval.

The DoC submission was accompanied by an Appraisal Report, which reflects the work conducted during an exploration and appraisal program on the Kurdamir field that began in 2009 and concluded in May 2014. The program consisted of acquiring 2D and 3D seismic, drilling three exploration wells, performing numerous formation tests and carrying out an extended well test ("EWT"). Positive results from the Kurdamir-2 EWT were a key component in advancing the DoC.

WesternZagros currently holds a 40 percent working interest in the Kurdamir Block. Talisman holds a 40 percent working interest and is the operator, while the KRG holds the remaining 20 percent.

http://www.oilvoice.com/n/WesternZagros ... 1cc2d.aspx

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Bloomberg

Kurdish Oil Breakthrough Said to Enable Quadrupled Export
By Selcan Hacaoglu and Grant Smith

Iraq’s Kurds, who have defied the central government by selling oil independently, are working to quadruple the capacity of their export pipeline within months, according to an official with knowledge of the situation.

The Kurdistan Regional Government, or KRG, more than doubled daily capacity to 300,000 barrels on its pipeline to Turkey as of yesterday with installation of a new booster station at Fishkabur, the official said, asking not to be named because of policy. The region is considering a fourth booster to allow delivery of as much as 500,000 barrels a day to the Mediterranean port of Ceyhan within as little as three months, he said. The KRG didn’t answer phone calls to its press office outside working hours today.

The KRG’s efforts to export their own crude has provoked legal action by authorities in Baghdad and fanned speculation that the semi-autonomous region will pursue greater independence. Their new exports, expanding even as Kurdish forces combat an Islamist insurgency in territory nearby, are reaching what the International Energy Agency says is an oversupplied global market where the return of lost Libyan supplies pushed prices to a 14-month low.

“The Kurds are getting more autonomy and can rely more on their production, so we’re going to see more supply coming out of Iraq,” Hakan Kocayusufpasaoglu, chief investment officer at Archbridge Capital AG, a Zug, Switzerland-based hedge fund, said by e-mail. Global supply is expanding as more oil comes from “areas that were causing problems last year and early this year,” he said.

More Autonomy

The export plans come after explorers including Chevron Corp. (CVX) and Afren Plc (AFR) evacuated staff and halted drilling in the Kurdish region as fighters from the Islamic State advanced through northern Iraq. DNO ASA, the Norwegian company that operates the Tawke field, said yesterday that it may need to push back production-growth targets for Kurdistan after companies that provide it with oilfield services evacuated workers.

The explorer, which exported 35 percent of its output in the second quarter through the pipeline to Turkey, said it may fail to reach a goal of boosting capacity at Tawke to 200,000 barrels a day by year-end, after reaching a peak of 130,000 barrels a day. At the same time, DNO said the KRG had cleared it and other producers to export oil on their own.

Economic Lifeline

For the Kurds, whose armed forces have played a central role in countering the Islamist insurgency in Iraq over the past three months, oil is an economic lifeline as they consider moves toward greater independence.

“The increased capacity is needed to allow delivery to Ceyhan of growing volumes from the Taq Taq and Tawke fields,” Bloomberg oil strategist Julian Lee said today. The “300,000 barrels per day through the Kurdish pipeline would boost Iraq’s exports by 12.5 percent and could make an important contribution to revenue, if accepted by Baghdad,” he said.

Turkey has ignored objections by Iraq’s central government, which says the oil exports are illegal and must be stopped. Seven tankers have so far loaded 6.5 million barrels of Kurdish oil transported to the Ceyhan terminal, Turkey’s Energy Minister Taner Yildiz said on Aug. 18. Iraqi Kurds have also separately been exporting crude on trucks via Turkey.

Baghdad has tried to block the KRG from exporting oil on its own, citing a constitutional clause making the central government responsible for oil shipments and revenues. A tanker carrying Kurdish crude has been waiting off the coast of Texas since July after a magistrate ordered the cargo be seized should it enter U.S. territorial waters, in response to a legal complaint from Iraq’s central government.

“The Kurds are becoming more confident of their ability to export crude independently of Baghdad,” said Lee, who writes for First Word and whose views are his own. “At least four of the seven tankers that loaded Kurdish crude from Ceyhan have successfully discharged their cargoes, suggesting that willing buyers are starting to emerge.”

To contact the reporters on this story: Selcan Hacaoglu in Ankara at shacaoglu@bloomberg.net; Grant Smith in London at gsmith52@bloomberg.net

To contact the editors responsible for this story: Alaa Shahine at asalha@bloomberg.net James Herron, Rachel Graham

http://www.bloomberg.com/news/2014-08-2 ... rough.html

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Oil Voice

WesternZagros announces second quarter 2014 operational and financial results

WesternZagros Resources Ltd. (TSX VENTURE:WZR) today released its operating and financial results for the second quarter ended June 30, 2014, and additional key highlights and activities to date. They include:

This week, filed a declaration of commerciality for the Kurdamir Block to move the Kurdamir discovery towards production. A conceptual development plan outlining infrastructure and development wells includes two initial phases to secure early oil and gas production.

Filed a development plan for the Garmian Block that includes three phases that target oil production of 25,000 to 35,000 barrels per day ("bbl/d") in 2015.

Announced plans to raise up to $450 million to fund development on the Garmian and Kurdamir blocks. This financing is a Cdn$250 million shareholder rights offering and a US$200 million debt financing arrangement, both of which are backed by the Company's largest shareholder. Proceeds will be used for production facilities and development wells.

Advanced a workover on the Sarqala-1 well to bring near-term production capability up to 10,000 bbl/d.

"With the anticipated funding from our recently announced financing transactions, we are now well positioned to advance our plans for drilling the wells and building the production facilities necessary to deliver light oil production and cash flow from our two promising Kurdistan Region fields. We've declared commerciality on both of our blocks and over the upcoming period we will be moving forward with our development plans. This is an exciting leap forward for the Company and marks an additional vital step in our transition from exploration to a new era of development and production," said Simon Hatfield, WesternZagros's Chief Executive Officer.

"Securing the support of our two largest shareholders for our pending financing demonstrates their confidence in our business plan and we are pleased that all of our existing shareholders will have the opportunity to participate in the planned rights offering and invest in the future development of our discoveries."

A summary of the activities, the financial statements the accompanying Management Discussion and Analysis ("MD&A") are available at http://www.westernzagros.com and on SEDAR at http://www.sedar.com.

Operations Summary

WesternZagros's assets comprise two contract areas, the Garmian and Kurdamir blocks, with significant oil and gas discoveries on both and an estimated 2.2 billion barrels of oil equivalent of gross unrisked prospective resources (combined mean estimate) remaining for future appraisal.

Operated Joint Venture: Garmian Block

On June 19, 2014, the Company submitted the development plan for the hydrocarbon resources in the Sarqala area. This followed a declaration of commerciality for the Sarqala discovery on December 23, 2013.

The Garmian phased development plan is focused primarily on the Jeribe/Upper Dhiban reservoir interval with other reservoirs being developed as they are proven up. Additional field facilities will be added based on the results of the development drilling program. The Company will work with the Kurdistan Regional Government ("KRG") to deliver associated gas from the Sarqala discovery that is not used in operations.

The development plan balances the need for immediate production with the need to appraise the ultimate reservoir size of the field. This will help to optimize the sizing of full field facilities to match cash flow.

The Sarqala-1 well workover commenced in March 2014 to increase production above the current capacity of 5,000 bbl/d up to 10,000 bbl/d. The workover is progressing, but has been delayed due to operational issues with the replacement of the 3-1/2 inch tubing. The issue is now resolved; however, as a result of the temporary reduction of field operations, the final stage of the well workover has been suspended pending resumption of operations.

The Hasira-1 well was suspended on May 25, 2014 after reaching a total depth of 4,181 metres, and after drilling through both the Jeribe and Oligocene reservoirs. Logging and initial open-hole tests have confirmed light oil in both the reservoirs. The open-hole test in the Oligocene reservoir flowed oil to surface during an initial clean-up flow; however, the test was prematurely terminated after six hours due to formation debris plugging the tubing. Estimated rates from the clean-up flow period were 3,000 bbl/d of fluid, with up to 40 percent oil cut and the balance being drilling fluids. The oil that flowed was consistent with the oil produced from Sarqala-1; approximately 40 degree API and no indications of hydrogen sulphide. Currently, the Company has suspended the well for future testing of both the Oligocene and Jeribe reservoirs using the workover rig from Sarqala-1.

Preparations are underway for the additional development of the Sarqala oilfield, including the first two development wells anticipated to spud in the first half of 2015. After receiving approval from the KRG, the Company anticipates commencing oil sales into the domestic market or into the export market via the Kurdistan Region-Turkey pipeline.

Non-Operated Joint Venture: Kurdamir Block

WesternZagros and its co-venturer and operator, Talisman (Block K44) B.V. ("Talisman"), submitted a declaration of commerciality to the KRG on August 19, 2014, for the oil and gas discovery in the Kurdamir Block. The Company and Talisman will next submit a phased development plan, outlining future production wells, facilities and supporting infrastructure, to the KRG. The Company estimates, as audited by its independent reserves evaluators, that as at February 10, 2014, the Kurdamir discovery contains gross unrisked contingent resources of 541 million barrels of oil and prospective resources of 1.3 billion barrels of oil and (combined mean estimates). Future expansion development phases will be determined based on the results from the development drilling campaign.

The development plan is currently under active discussions with Talisman and the KRG.

The Company has conducted the following work to better understand the Kurdamir discovery and to prepare for future development activities and for further delineation of the prospective resources:

A 44-day extended well test at the Kurdamir-2 well was completed on May 2, 2014. Cumulative oil production was approximately 90,000 barrels and no formation water was produced. The Company views these test results as support that the current contingent resource estimates for the Oligocene reservoir on the Kurdamir Block represent a conservative view. During testing, the oil flow rate was restricted by the capacity of the gas flare.

WesternZagros analyzed the Kurdamir-3 well log and test data, and concluded that the formation water encountered in the previous Kurdamir-3 well was most likely from a deeper interval. Based upon the oil tested and oil pay calculated on wireline logs from Kurdamir-3, the lowest known oil would extend significantly lower than the lowest known oil used for estimating the current contingent resources; down to the deepest point drilled to date in the Oligocene reservoir. Extending the lowest known oil to this depth has the potential to convert approximately 350 million barrels ("MMbbl") of the current mean estimate of prospective oil resources into contingent oil resources.

In addition, the Company continues to interpret the 3D seismic data acquired over the Kurdamir wells and the nearby Baram-1 well to determine the implications for understanding of the Kurdamir discovery. This work has recently identified that while a fault exists between Baram and Kurdamir, the fault is unlikely to be a seal. This means that the oil-water contact identified on wireline logs in the deeper Baram-1 well may represent a common oil-water contact for both structures. This would extend the known oil leg further down by another 600 metres than in the current audited contingent resources estimate. If this common oil-water contact can be proven, it has the potential to convert an additional 600 MMbbl of the current mean estimate of prospective oil resources into contingent oil resources. This is in addition to the 350 MMbbl of prospective oil resources discussed in the previous paragraph. On a combined basis, it would allow the conversion of approximately 1 billion barrels of prospective oil resources into contingent resources. (exciting info)

The Company continues to monitor the progress and results from third-party wells that are drilling in the Kurdamir structure on neighbouring blocks and results of both wells will be integrated into its future plans. Test results have not yet been released from the Topkhana-2 well targeting the Oligocene reservoir, recently completed by Talisman on its neighbouring Topkhana Block. The Massoyi-1 well, currently being tested by Korea National Oil Corporation on its neighbouring Sangaw South Block to the north of the Kurdamir Block, is targeting the Oligocene and Eocene reservoirs.

Financial

As at June 30, 2014, WesternZagros had $49.7 million in working capital.

WesternZagros's share of exploration and evaluation ("E&E") expenditures during the first six months of 2014 included 50 percent of Garmian Block costs and 60 percent of Kurdamir Block costs. WesternZagros's share for these activities and other capitalized costs was as follows:

Link to Full Report:

http://www.oilvoice.com/n/WesternZagros ... bbcdb.aspx

[Anthea]

Bloomberg

Kurdish Oil Shipments From Turkey Said to Resume as Tanker Loads
By Selcan Hacaoglu

Shipments of Iraqi Kurdish oil resumed from the Turkish terminal Ceyhan today as the Spanish-flagged tanker Ultimate Freedom completed loading and prepared to depart, according to an official with knowledge of the situation who asked not to be identified, citing policy.

The tanker loaded some 950,000 barrels and is expected to leave Ceyhan shortly, the official said by phone. Oil flow from northern Iraq restarted last week after a pause of more than two weeks while Iraqi Kurds installed a booster station to speed up the flow through the pipeline.

The Malta-flagged Phoenix AN and the Greek-flagged United Carrier tankers were on their way to Ceyhan on the Mediterranean cost to pick up some 250,000 and 500,000 barrels of Kurdish oil, respectively, the official said.

The Kurdish regional government’s press officer didn’t answer phone calls seeking comment today. Turkey has ignored objections by Iraq’s central government, which says the oil exports are illegal and must be stopped. Iraqi Kurds are also exporting crude on trucks via Turkey.

To contact the reporter on this story: Selcan Hacaoglu in Ankara at shacaoglu@bloomberg.net

To contact the editors responsible for this story: Alaa Shahine at asalha@bloomberg.net Ross Larsen, Kevin Costelloe

http://www.bloomberg.com/news/2014-08-2 ... loads.html

[Anthea]

Reuters

Tanker carrying Kurdish crude changes course toward Cyprus

A tanker carrying 300,000 barrels of Kurdish crude oil has changed its destination to Limassol, Cyprus, as it returned from the United States without delivering its disputed cargo to a New Jersey refinery.

The Minerva Joy tanker had previously listed its destination as "Gibraltar orders," which usually implies a destination in the Eastern Mediterranean or further east. It changed its destination to "Limassol orders" at around 1600 GMT on Saturday, according to Reuters AIS Live shiptracking.

On Aug. 13, the Minerva Joy began sailing eastwards from off the coast of Paulsboro, New Jersey, after refiner Axeon Specialty Products said it would not buy or accept delivery of any cargoes of disputed Kurdish crude oil for its Paulsboro refinery.

Iraq's central government has sought to block independent exports of crude by the Kurdistan Regional Government (KRG).

The KRG argued it was allowed to sell crude under the Iraqi constitution, which Baghdad disputes. Several cargoes of Kurdish Shaikan crude have recently reached the United States, but not all have been able to discharge their oil.

The United Kalavrvta is anchored outside of Galveston, Texas, with its cargo of Kurdish crude still unloaded.

In total, about $140 million worth of Iraqi Kurdish crude oil has been stopped from entering the United States in the last month.

The United States has not banned companies from buying Iraqi Kurdish oil, but has warned firms they may face legal action from Baghdad.

Axeon has said it received a separate cargo of Kurdish Shaikan crude in June.

At the end of July, refiner LyondellBasell NV confirmed it had recently bought "modest quantities" of what public records showed was Kurdish Shaikan crude and said it would scrap further purchases of the disputed oil for the time being. (Editing by Jessica Resnick-Ault and Jeffrey Benkoe)

http://www.reuters.com/article/2014/08/ ... TW20140825

[Anthea]

Bloomberg

Kurds Get Seizure Order Thrown Out for Texas Oil Tanker
By Laurel Brubaker Calkins

The Kurdistan Regional Government can bring $100 million of crude ashore in Texas after a U.S. judge threw out a court order that would have required federal agents to seize and hold the cargo for the Iraqi Oil Ministry until a court there decided which government owns it.

U.S. District Judge Gray Miller in Houston said he lacked authority under federal laws governing property stolen at sea to decide the dispute. Both Iraq’s central government and the regional government claim control of 1 million barrels of Kurdish crude waiting in a tanker moored in international waters off the Texas coast for almost a month.

Miller ruled yesterday that Iraq’s national oil ministry lost control of the crude when the Kurdish government pumped it without authorization from oilfields in the northern part of the country. Iraq failed to convince Miller that the oil was misappropriated when it was loaded into a tanker in the Mediterranean Sea after being pumped across Turkey in an Iraq-owned pipeline.

“Kurdistan’s unauthorized export of oil over land -– and later overseas –- may violate Iraqi law, but it does not violate U.S. maritime law,” Miller said.

Miller threw out a seizure order issued July 28 by a Houston magistrate judge, who questioned U.S. jurisdiction in the matter while agreeing to store the cargo onshore at Iraq’s expense as the debate continued in that nation’s Supreme Court.

Reparations, Royalties

Kurdistan officials have been fighting the national government over billions of dollars in unpaid war reparations and royalties from oilfields owed by the central government. Attorneys for Iraq’s Oil Ministry had said the only way they could force the Kurdistan Regional Government to appear before the Iraq Supreme Court was to seize the disputed cargo in the U.S.

Phillip Dye, a Houston attorney for the Iraqi Oil Ministry, didn’t immediately respond to phone and e-mail messages after regular business hours yesterday seeking comment on the ruling.

The case is Ministry of Oil of the Republic of Iraq v. 1,032,212 Barrels of Crude Oil, 3:14-249, U.S. District Court, Southern District of Texas (Galveston).

To contact the reporter on this story: Laurel Calkins in Houston at laurel@calkins.us.com

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net

http://www.bloomberg.com/news/2014-08-2 ... anker.html

[Anthea]

Yahoo News

Jihadists burn three Iraq oil wells as Kurds launch attack

Kirkuk (Iraq) (AFP) - Retreating jihadists set three wells ablaze at a northern Iraq oil field Thursday as they battled Kurdish forces who launched a major attack nearby, officials said.

The Islamic State (IS) jihadists set the wells on fire before deserting the Ain Zalah field, which was seized by militants along in early August, an official from the North Oil Company said.

A colonel in the Kurdish peshmerga forces said they had launched a major attack that has seen the jihadists pushed back from several villages in the area of the oil field.

The officer and Nineveh provincial council chief Bashar al-Kiki both said that Kurdish forces had also taken control of Batana mountain, near Zumar.

Kiki said the strategic position would help the peshmerga retake the Zumar area from jihadists, and that the Kurdish forces are supported by US air strikes.

IS-led militants launched a sweeping offensive in June that overran large areas of Iraq, and turned their sights on Kurdish forces in the north earlier this month, driving them back toward Arbil, the capital of their three-province autonomous region.

That advance, during which the militants targeted minority groups and forced some 200,000 people to flee, sparked a campaign of US air strikes which, combined with international shipments of arms and ammunition, have helped the Kurds claw back some ground.

The militants reportedly rake in significant volumes of cash from the sale of oil from fields they control.

They have made repeated attempts to seize the Baiji oil refinery, which once filled some 50 percent of Iraq's demand for refined petroleum products, but have each time been driven back.

The militant offensive has wreaked havoc on northern production and exports, but Iraq's main southern fields and export terminals have not been affected by the violence.

Article and Video:

http://news.yahoo.com/jihadists-burn-th ... 26299.html

[Anthea]

Mail Online

Mystery of the missing tanker: Ship carrying $100million in Kurdish oil vanishes from radar screens 60 miles off the coast of Texas

United Kalavrvta, carrying one million barrels, has disappeared in the Gulf of Mexico on Thursday
Ship was anchored near Texas in preparation to unload its cargo to U.S. when it went dark
Legal dispute with Iraq and the semi-autonomous region of Kurdistan means ship was in limbo for a month
Iraq sees Kurdish oil deals as smuggling and wants to block future exports
They filed lawsuit in U.S. court to order retrieval of cargo but case rejected
U.S. Coast Guard now believes ship has turned off its identifying beacon
By Jack Crone for MailOnline and Louise Boyle and Reuters

The Kurdish tanker disappeared from Coast Guard radar screens following a month of legal wrangling over whether it can offload its cargo in the U.S.

As the disintegration of Iraq amid mounting violence continues, the semi-autonomous regime in Kurdistan – in the north of Iraq – is trying to cash in on Iraq's oil reserves and export its own crude.

Iraqi Kurdistan has exported at least eight million barrels of oil since May, energy experts told Al Arabiya News.

But the increasingly weak regime in Baghdad is trying to keep control of its oil billions and says the Kurdish regime cannot sell the oil in the U.S.

The U.S. Coast Guard's AIS ship-tracking system showed no position for the United Kalavrvta on Thursday, which was carrying one million barrels - and was 95 per cent - when it went dark.

The tanker was attempting to unload its cargo at sea, off the coast of Texas, after leaving the Turkish port of Ceyhan in June and anchoring near the U.S. port of Galveston in late July.

The U.S. Coastguard confirmed to MailOnline today that the last contact the agency had with the United Kalavyrta was when the ship's certificate of compliance was completed on July 27.

The vessel's disappearance is now thought to be the latest development in a high-stakes dispute between Baghdad and the Kurds over the right to export oil.

Several other tankers transporting disputed oil from Iran or Kurdistan have switched off their transponders before unloading their cargo - making their movements extremely difficult to track.

A Coast Guard official told MailOnline today that the vessel might have turned off its beacon in the Gulf of Mexico, which it is not supposed to do.

The official also said it was possible the ship had traveled outside the range of the U.S. Coastguard antennas which would account for it vanishing from the AIS ship-tracking system.

Earlier this year, cutbacks in spending at the U.S. Coastguard have meant that longer-range antennas in the Gulf of Mexico have been gradually shutting down, the official said, making it harder to track ships that move further away from the shore.

U.S. Coastguard also told MailOnline on Friday that it had no plans to search areas of the Gulf where the ship had been anchored.

The agency has a HC-144 Ocean Sentry aircraft at its disposal which last took images of the oil tanker United Kalavyrta on July 25.

Only a few days ago, the partially-full Kamari tanker carrying Kurdish crude oil, disappeared from satellite tracking north of Egypt's Sinai Peninsula.

Two days later, the empty vessel reappeared near Israel.

In late July, the tanker United Emblem offloaded part of its cargo of Kurdish crude oil onto another ship in the South China Sea.

The evasive behavior is the result of Baghdad wanting to block the Kurds from exporting the oil as they believe they have the exclusive right to do so.

The Iraqi government in Baghdad has filed a lawsuit in a U.S. court to reclaim control of the United Kalavrvta cargo and block the Kurdistan Regional Government (KRG) from delivering its cargo.

The suit demonstrates that Baghdad is now stepping up their legal and diplomatic push to block Kurdistan's oil deals, which they view as smuggling.

However, the Kurds see such deals as crucial to their own dreams of independence.

On Monday, the U.S. court threw out the order saying it lacked jurisdiction to seize the tanker as it disappeared some 60 miles off their coast.

But the judge invited Iraq to re-plead its case over the cargo's rightful ownership.

The issue is expected to fuel tensions between Washington and Baghdad, as in theory, Iraq can file claims against anyone taking delivery of the oil.

A Coast Guard official said the vessel in the Gulf of Mexico might have turned off its beacon, sailed beyond antennas that monitor transponders, or perhaps some antennas might have been taken out of service.

However, dozens of vessels were visible on Thursday in the Galveston Offshore Lightering Area, where the Kurdish tanker was last seen.

http://www.dailymail.co.uk/news/article ... h-oil.html

[Anthea]

Oil and friction in Iraq
Anthony Franks OBE from Mars Omega LLP

Oil continues to be a cause of considerable friction between Baghdad and Irbil, and is most definitely not lubricating relationships.

The game of “Texas Hide and Seek” of Kurdish crude continues somewhat bafflingly in the warm waters of Houston, against the backdrop of entrenched political thinking in Baghdad.

Yesterday, Reuters reported that the signal for the United Kalavrvta - loaded with 1m barrels of Kurdish crude – had disappeared from the Automatic Identification System (AIS) satellite tracking system.

Reuters reported “The AIS ship tracking system used by the U.S. Coast Guard and Reuters on Thursday showed no known position for the United Kalavrvta, which was carrying 1 million barrels of crude and 95 percent full when it went dark.”

Other oil tankers shipping Kurdish crude previously lightered their cargoes after switching off their AIS transponders; hence a possible deduction might be that is what the United Kalavrvta may be doing now.

However, yesterday, after 48 hours of silence, the United Kalavrtva apparently emerged from transponder transmission limbo, and signalled it was still anchored some 60 miles off Galveston.

This morning we pulled up the latest AIS data for the United Kalavrvta United Kalavrvta, and it does not quite tally with what the wires are saying. Specifically, it says the following: UNITED KALAVRVTA, Position Recorded on: 2014-08-26 06:41:03 (UTC), Lat/Lon: 28.58248/-94.2509, Speed/Course: 0.0 kn / 166°.

What this means is that no-one knows today where the tanker actually is located. Its last known position – we stress ‘known’ – was on 26 Aug 14 – some three days ago.

The backdrop to this electronic game of hit or miss is that Baghdad has decided to challenge Judge Miller’s decision made on Monday to dismiss Baghdad’s original lawsuit against Irbil, over sending the cargo of crude to the US for sale.

If the US court order had been upheld, this would have seen US authorities seize and hold the Kurdish crude cargo on behalf of Baghdad - until the Iraqi Supreme Court had decided who owned the oil.

Miller said he lacked authority under federal laws governing property stolen at sea to decide the dispute. Bloomberg reported Miller saying “Kurdistan’s unauthorised export of oil over land -– and later overseas –- may violate Iraqi law, but it does not violate U.S. maritime law."

To the Iraqi federal Ministry of Oil, Miller's ruling potentially meant the KRG could export oil to the US and generate critically needed revenue, and Baghdad does not want that at this stage of the national political crisis.

Previously, the legal advice to Baghdad suggested that the only method of compelling the KRG to appear before the Iraq Supreme Court - which would then issue a definitive ruling on the ownership of the cargo - would have been to seize the crude in the US.

The Iraqi Supreme Court under Judge Midhat al-Mahmud has, in the past, to say the least been very supportive of former PM al-Maliki, who was confident that the Court would rule in favour of Baghdad.

But with al-Maliki’s departure, the Court may not be quite so keen to make legal judgements which were often seen by many external observers to be as much about politics as they were about law.

Kurdistan remains desperately short of money after Baghdad enforced a de facto economic embargo by refusing to pay Irbil its 17% of the federal budget, on the grounds that it was operating an unconstitutional policy towards oil sales.

In an attempt to raise much needed cash, since May 14, Irbil has reportedly shipped over 8M barrels of oil from Ceyhan, according to a Turkish maritime source, who said yesterday to Reuters that the 11th tanker sailed from Ceyhan.

The KRG is now apparently using smaller oil tankers – the United Kalavrtva is technically a LR2 Suezmax – to try to circumvent Baghdad's strenuous attempts to block sales. The same Turkish source suggested that the tanker that sailed from Ceyhan was loaded with 250K barrels of crude.

The continued attempt by Irbil to ship and sell oil during a spectacularly volatile and fragile political and security moment will doubtless cause more ire in Baghdad.

However, what was news was the figure of 8M barrels in 11 shipments. If that is accurate, then the export rate is much, much higher than previously thought, and will exponentially increase the ire in Baghdad.

We may therefore be seeing a new trend in oil sales by the KRG: sending much smaller multiple cargoes to sea, which may be easier to sell quietly on the open market.

Four big cargoes have been delivered so far, but this has been done under the world’s microscope, and that scrutiny is both unwelcome and unhelpful for Irbil.

If the Turkish source is right, and 11 cargoes have bunkered and sailed, that must mean that a nascent crude order book is being put together, which is good news for Irbil, and enraging for Baghdad.

Research this morning shows there are two oil tankers being shown at Ceyhan; furthermore - the Suezmax United Carrier arrived at 2014-08-27 07:52:00, and put to sea on 2014-08-28 20:34:00.

As we write, the United Carrier is “Underway using Engine” and is southwest of a line drawn between Limassol in Cyprus to the NW, and Beirut in Lebanon to the SW – with a destination given as “Suez Orders”.

The United Carrier is part of the same fleet the KRG has used for previous oil sales – run by a Greek shipping agent. The other two other oil tankers in Ceyhan are the Aias - Liberian flagged - and the Kamari – Greek flagged.

The background to the importance of the United Kalavrvta cargo was that Irbil was confident that their decision to drive forward towards independence would receive the support of the US. The involvement of US oil companies, and the seemingly warm Irbil/Washington relationship may have helped colour that perception.

However, the US air strikes launched on 7 Aug 14 to beat ISIS back from Irbil was not to support the KRG’s political ambitions, but rather to stop the rapid collapse of federal Iraq.

Despite recent comments by VP Joe Biden that Iraq logically could divide into three distinct ethnic areas, somewhat confusingly, Washington’s other official position is that Kurdistan should stay in federal Iraq; it does not actually want Iraq to implode any more than it already has.

The Biden Plan would leave the Sunni extremists of ISIS in de facto control of a large swathe of northern Iraqi territory; the Kurds secure inside their own borders, with the Shi’a sequestered in Baghdad, and the southern states also probably pushing for greater political autonomy.

To Washington’s absolute horror, this division would lead in turn to an even greater increase in influence over Iraq by Iran, and could see a massive shift of the balance of power in the Arabian Gulf.

US airpower is thus linked to diplomatic soft power to keep Kurdistan part of a homogenous Iraq – even thought the country plainly is anything but that.

On 18 Aug 14, when Nuri al-Maliki was sidelined by President Fuad Massum, President Obama stated “the strong support of the United States of America” for all parties in Iraq was contingent on not returning to “the same kind of dysfunction that has so weakened the country.”

Washington would apparently still like to see Iraq as a unitary state with an inclusive government, however dubious a political proposition that might be in reality.

It seems somewhat ironic that the next move in the political chess game of oil ownership between Baghdad and Irbil is likely be decided by Baghdad deploying US lawyers in Texas who bill by the hour. It is now Irbil’s move.

http://www.oilvoice.com/n/Oil_and_frict ... 75e4b.aspx