Exclusive: How Kurdistan bypassed Baghdad and sold oil on global markets

Reuters ^ | Nov 17, 2015 | DMITRY ZHDANNIKOV

[thackney]

Iraq's semi-autonomous region of Kurdistan has for the first time detailed its secretive oil exports operations and said it plans to sell more, whether Baghdad likes it or not, as it needs money to survive and fight Islamic State.

The region's minister for natural resources, Ashti Hawrami, said that to avoid detection oil was often funneled through Israel, transferred directly between ships off the coast of Malta, and decoy ships used to make it harder for Baghdad to track.

Kurdistan says it had been forced to bypass Baghdad and begin exporting oil directly because the latter refused to respect budgets in 2014 and 2015. The current and former Iraqi central governments have both said the Kurds have failed to respect deals to transfer agreed volumes of oil to Baghdad.

Kurdistan is entitled to 17 percent of Iraqi's overall budget, and argued it needed stable revenues to pay its bills, support over a million of refugees fleeing the war in Syria and Iraq finance its Peshmerga army fighting against Islamist militants.

Kurdistan is exporting over 500,000 barrels per day (bpd) of oil - or every seventh barrel of OPEC's second largest exporter - and believes that Baghdad has now accepted, at least in part, direct Kurdish exports going to as many as 10 countries.

"Effectively, we have been financially discriminated against for a long time. By early 2014, when we did not receive the budget, we decided we need to start thinking about independent oil sales," Hawrami told Reuters.

With new pipelines completed, the Kurdistan Regional Government (KRG) still needed to find buyers for its oil, effectively one large tanker every two days.

Most customers were scared of touching it with Baghdad threatening to sue any buyer. Large oil companies - including Exxon Mobil and BP - have billions of dollars...

[NonValueAdded]

Let the Kurds have their way.

[dfwgator]

Let the Kurds have their way.

[bert]

How did the oil make it to Israel to be transported by sea?

[thackney]

Iraq-Turkey (Kirkuk-Ceyhan) Oil Pipeline is one options.

KRG statement on first oil sales through pipeline export
http://cabinet.gov.krd/a/d.aspx?l=12&a=51589
FRI, 23 MAY 2014

[bert]

Thanks..... that’s interesting

I wondered about Turkey helping out the Kurds when they apparently are against the development of a Kurdistan that might include the Kurdish regions in Turkey.

[SMARTY]

That’s a significant component to the ME problem.

ALSO:

“A world that did not lift a finger when Hitler was wiping out six million Jewish men, women, and children is now saying that the Jewish state of Israel will not survive if it does not come to terms with the Arabs. My feeling is that no one in this universe has the right and the competence to tell Israel what it has to do in order to survive. On the contrary, it is Israel that can tell us what to do. It can tell us that we shall not survive if we do not cultivate and celebrate courage, if we coddle traitors and deserters, bargain with terrorists, court enemies, and scorn friends.” Eric Hoffer

[thackney]

A little more background:

In exchange for sending 550,000 barrels a day through a pipeline connecting northern Iraq to the Mediterranean port of Ceyhan starting in January, the KRG expected to receive $1 billion a month from Baghdad.

But the precipitous fall in global oil prices has strained Baghdad’s finances. Oil has been hovering around $50 a barrel after more than halving over the past 12 months.

At the same time, the fight against the Islamic State group has become an immense drain on resources in spite of billions of dollars in U.S. military aid.

As a result, payouts from Baghdad remained far short, with monthly transfers never exceeding $450 million, according to the Kurds.

“We do understand that Baghdad faces some financial difficulties

Iraq oil feud renewed as cash-strapped Kurds turn backs on deal with Baghdad
http://www.washingtontimes.com/news/2015/aug/16/iraq-oil-feud-renewed-as-cash-strapped-kurds-turn-/?page=all
August 16, 2015

Since June, the Kurdistan Regional Government, which governs the Kurdish region in northern Iraq, has been ramping up independent oil sales. The KRG says it needs the oil revenue because it is weighed down by the costs of fighting Islamic State militants.

The move is hard for the central government to ignore, analysts say.