U.S. Judge Signs Order to Seize Kurdish Oil From Tanker Off Texas

A still image from video taken by a U.S. Coast Guard HC-144 Ocean Sentry aircraft shows the oil tanker United Kalavyrta (also known as the United Kalavrvta), which is carrying a cargo of Kurdish crude oil, approaching Galveston, Texas July 25, 2014. Picture taken July 25, 2014. REUTERS/US Coast Guard

By Anna Driver and Ahmed Rasheed

HOUSTON/BAGHDAD, July 29 (Reuters) – Iraq scrambled to gain control of a cargo of Kurdish oil worth $100 million off the Texas coast on Tuesday after the U.S. ordered its seizure in a bid by Baghdad to halt oil sales by the autonomous region of Kurdistan.

A U.S. judge overnight approved a request from Baghdad’s lawyers on Monday that laid claim to the oil, saying the cargo of some 1 million barrels of crude from Iraqi Kurdistan was sold without its permission.

Oil sales are seen as central to Kurdish dreams of independence, which Baghdad opposes, and the latest dispute over exports reflects Iraqi Kurds’ emboldened steps toward seizing greater political and economic autonomy.

While the rulers of the country’s northern Kurdish enclave have long aspired to independence, their position has strengthened in recent months as Kurdish Peshmerga troops have outperformed Iraqi soldiers against Islamist militants.

Kurds have also succeeded in cementing their control of land and oil reserves around the resource-rich city of Kirkuk, while Iraqi Prime Minister Nuri al-Maliki, a Shi’ite Arab who has been an adversary of Iraqi Kurds, has fallen out of favor in Washington.

After the ruling, Iraq warned companies against trying to buy other shipments of Kurdish crude, while Kurdish leaders asserted their right to sell the oil but said they faced obstacles. ID:nL6N0Q4540]

“We have to acknowledge that the ruling of the U.S. court will definitely have negative consequences on the region’s attempts to market its oil,” a Kurdish government official said.

“Buyers now will start to step back and think twice before purchasing Kurdish crude as it will make them face legal problems with Baghdad. For us, that situation will be really frustrating.”

RESTRAINING ORDER

Washington has opposed direct oil sales by the autonomous region, fearing they could contribute to a break-up of Iraq. But it has stopped short of banning U.S. companies from buying the oil while warning them of potential legal risks.

At least one cargo of Kurdish crude was delivered to the United States in May to an unidentified buyer, and four other cargoes of Kurdish crude have been delivered this year in Israel.

Court filings said a British Virgin Isles-registered company called Talmay Trading, which has previously traded Russian crude, was involved in the deal. But it lacks refineries and is not believed to be the end user in the United States.

The United Kalavrvta, the tanker carrying the oil arrived near Galveston Bay on Saturday, and being too large to enter ports near Houston and dock, was given clearance by the U.S. Coast Guard on Sunday to transfer its cargo offshore to smaller boats that would deliver it to the U.S. mainland.

Then Iraq’s central government filed suit.

The office of the U.S. Marshal for the Southern District of Texas said it was too early to say how the order from Magistrate Judge Nancy K. Johnson would be carried out.

It was unclear if Iraq would have to arrange for a marine services company to offload the cargo or whether AET Offshore Services, a Texas company that had been hired to unload the tanker for delivery to the buyer, would do it.

AET asked in a separate court filing for a temporary restraining order so it was not forced to handle the crude.

The judge’s order said the vessel would be allowed free movement after the cargo is unloaded.

OTHER DISPUTED TANKERS AT SEA

Piecemeal oil exports have gone from Iraqi Kurdistan to Turkey and Iran by truck in the past, which Baghdad also opposed. But the opening about seven months ago of a new pipeline to Turkey, which could supply the Kurds with far greater revenues, has met much fiercer opposition from Baghdad.

One Kurdish tanker of crude pipelined to Ceyhan in Turkey, the United Leadership, has been stuck off the coast of Morocco for more than a month.

Another, the United Emblem, has sailed to Asia, and is anchored about 15 miles (24 km) off the coast of Malaysia according to Reuters AIS Live tanker tracking after passing through the Singapore Strait, a key oil trading hub.

The case is 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. (Additional reporting by by Isra’ al-Rubei’i in Baghdad, Terry Wade and Kristen Hays in Houston; Patience Haggin in New York; David Sheppard in London and Supriya Kurane in Bangalore; Editing Marguerita Choy)

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