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Baghdad to file new claims against KRG exports. By By Ben Lando and Ben Van Heuvelen

This story was published before the claims were filed. The claim in Texas was confirmed filed the evening of Sept. 4, and the claim in Greece was filed mid afternoon on Sept. 5.

Iraq’s central government is filing new legal claims in its ongoing battle to prevent the autonomous Kurdistan region from independently exporting oil to international markets.

On Thursday, lawyers representing Baghdad will file a new claim – as well as an amendment to a previous claim – against an oil tanker filled with Kurdistan-exported crude, which has been idling off the coast of Texas.

On Friday or Monday, they will also file a claim in a Greek court against the owner of many tankers chartered by the Kurdistan Regional Government (KRG) to ship at least 8 million barrels of crude globally.

The imminent legal action, which was confirmed by an official familiar with the plans and corroborated by documents obtained by Iraq Oil Report, underscores Baghdad’s determination to oppose Kurdish oil autonomy, even as the two sides negotiate to form a new government and defuse their long-running conflicts.

Iraq’s legal attacks seemed to falter last month, when a Texas federal judge vacated a late-July order to seize the more than 1 million barrels of oil in the United Kalavryta. The KRG had chartered the ship from Greek-incorporated Marine Management Services (MMS), in defiance of Baghdad, which considers any unauthorized oil sales to be tantamount to smuggling.

The judge refrained from addressing the merits of the case, and instead gave a narrow ruling based on jurisdiction. Because the KRG took possession of the crude when it was pumped from the ground, the judge said, it could not be subject to U.S. maritime law. The ruling gave Iraq 10 days to amend its lawsuit.

The claim to be filed Thursday will “address the jurisdictional issues raised by the court in its decision of last week,” according to one official close to the lawsuit. “The amended complaint will continue to seek orders regarding the oil cargo itself, and will also seek the sequestration of the oil cargo, as well as relief against the KRG and a buyer to be identified for illegally loading, shipping and possibly contracting to sell the oil cargo.”

It is part of a broader campaign by Baghdad to challenge the legality of the KRG’s exports and thus prevent the autonomous region from monetizing the assets.

The two sides disagree over the extent that the Iraqi oil sector should be centralized, and each one claims the Iraqi Constitution backs their case. Iraq’s state institutions have not been able to resolve the issue: Parliament has failed to pass an oil law since 2006, and the federal High Court, which was first petitioned on the issue in 2012, has been prevented from addressing the case because the KRG has refused to attend any hearings.

Earlier this year, Baghdad filed a claim of arbitration in the International Chamber of Commerce in Paris against Turkey and its state pipeline firm, Botas, for allegedly violating the terms of the agreement governing the Iraq-Turkey Pipeline by facilitating Kurdish exports without Baghdad approval.

In its new claim, in Piraeus, Baghdad will claim that MMS “has actively facilitated the KRG’s illegal export scheme, repeatedly ignoring warnings that the crude oil it was carrying does not belong to the KRG,” according to an Oil Ministry statement released Thursday, prior to the court filings which are expected over the next two business days in Greece.

The United Leadership, United Emblem, the United Kalavryta, United Carrier and United Dynamic are all ships of MMS involved in the transport of crude exported by the KRG, the Oil Ministry said in its statement.

“MMS has declared false destinations for its tankers, turned off the ships’ Automatic Identification System transponders to avoid detection (violating international safety regulations), and undertaken dangerous nighttime ship-to-ship transfers of crude oil on the high seas,” it said.

Defendants in the lawsuit will be “the management and board of directors of MMS and the companies that own the vessels in question,” who will be tagged with at least $318 million in damages “and possibly significantly more, as a result of its willing and active participation in the KRG’s illegal crude oil export scheme.”

The statement threatened “intermediaries, buyers, producers, shippers and other parties that assist the KRG in exporting crude oil” with legal action.

KRG Minister of Natural Resources Ashti Hawrami, speaking at an Istanbul conference Thursday, said the KRG would continue to exercise the oil rights it has long claimed.

“We will export oil into the market. We have one ship in Texas stranded there. The first legal action, we won,” he said, referring to the court ruling that rejected the seizure order. “We hope that Iraq doesn’t do anything else. If they do, then unfortunately we have to respond. We have a legal team, we have no choice but to defend our claim.”

Source: Iraq Oil Reports, Ben Lando reported from the United States. Ben Van Heuvelen reported from Istanbul, Published September 4th, 2014


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