By John Lee.
Reuters reports that Kurdistan has begun shipping oil to international markets in independent export deals that some see as paving the way to greater Kurdish autonomy.
The move is likely to further enrage the central government in Baghdad, but the involvement of two of the world's largest trading houses, Trafigura and Vitol, could make it difficult for Baghdad to retaliate, as it depends on those firms for a proportion of its refined oil imports like gasoline and diesel.
Trafigura reportedly snapped up the first cargo of Kurdish light oil, or 'condensate', offered for delivery in October via the intermediary Powertrans in a public tender.
The oil was sent by truck to Turkey, where it loaded at the start of the month.
Vitol was quick to follow, becoming the second major oil firm to buy Kurdish oil marketed independently of Baghdad, picking up a second 12,000 tonne cargo of condensate for loading at the end of the month. At around $890 a tonne, each shipment is worth over $10 million.
A spokesman for the KRG said the Kurdish condensate is being swapped for refined products with a private Turkish company with no cash involved; "what the private Turkish company does with the condensate it owns is not the responsibility of the KRG," he said.
This direct trade, which began last summer, is intended to help plug a shortfall of kerosene and diesel, which the region needs to fuel its power stations. Though endorsed by Ankara, Baghdad said the deliveries by truck were illegal.
Iraq government spokesman Ali al-Dabbagh said "Iraq maintains its right to legally pursue all those who participate in smuggling the property of the Iraqi people locally or internationally".
In contrast, just two days ago Aswat al-Iraq quoted Kurdish Natural Resources Minister Ashti Hawrami (pictured) as saying the "Kurdish region will abide by the decision to hand over produced oil to the federal government for export".
(Sources: Reuters, Aswat al-Iraq)