Kurdistan Opens Oil Trade Route Via Iran

According to The Express Tribune, Iraq’s Kurdistan region is exporting crude oil by truck to an Iranian port for shipping to Asia, using a trade route that is likely to anger both Baghdad and Washington.

In a dispute largely over revenue sharing, Kurdistan’s crude exports through a pipeline controlled by the Iraqi central government, dried up last year. However, it is transporting about 50,000 barrels of crude and condensates per day by road from the landlocked region through Turkey.

Now, sources are reporting, that the Kurdistan Regional Government (KRG) has approved a second route for crude through Iran used previously only for petroleum products.

For the past two months, crude has been trucked from Kurdish fields over the border to Iran’s Bandar Imam Khomeini (BIK) terminal, 900 km to the south on the Gulf. Amounts are unclear but have been reported to be as much as 30,000 bpd.

One industry source in Kurdistan said the regional government in Arbil was anxious not to put out either of the region’s powerful neighbours, Turkey and Iran, in transporting the crude. “It’s a political compromise,” said the source, who declined to be identified. “They cannot ignore the Iranians and go all the way with the Turks. They have to balance.”

However, it is not clear what Iran, which faces huge problems in selling its own oil products because of international sanctions, gets out of the arrangement.

Oil lies at the heart of the dispute between the Arab led Iraqi central government and the ethnic Kurdish run northern enclave. At issue are control of oilfields, territory and crude revenues shared between the two administrations.

“We have made it very clear that the only acceptable option for oil exports is through the federal pipeline network,” a senior Iraqi oil official said. “We consider any other trade, whether it be through Iran or Turkey, as smuggling. It’s illegal.”

Baghdad claims sole authority over oil exploration and exportation, and in the past has accused the Kurds of smuggling crude via Iran and keeping the revenue for itself.

The KRG says its right to exploit and export the reserves under its soil is enshrined in Iraqs federal constitution, which was drawn up following the US-led invasion of 2003.

Arbil has already antagonized Baghdad by signing exploration and production deals on its own terms with firms including Exxon Mobil, Chevron and Total, and is currently laying the final stretch of an independent export pipeline to Turkey.

Fuel oil and naphtha have moved by truck from Kurdistan through Iran for years, because Kurdish domestic sales contracts allow the sale of these products outside Iraq.

Washington, a long standing ally of the KRG, has previously pressured Arbil to stop this trade as it tightens the sanctions imposed over Iran’s disputed nuclear programme.

“We have advised Arbil in the past not to engage in business with Iran and will continue to do so,” a US diplomat said when asked how Washington would view the KRG’s official approval for crude exports through Iran.

Amounts of Kurdistan crude being trucked through Iran are likely to be modest when compared with its production capacity. Industry sources report that the oil is mainly from the region’s three biggest producing fields – Taq Taq, Tawke and Khurmala.

At Iran’s BIK terminal, the truckloads of crude are pooled in storage tanks and then pumped onto ships for export.

The tankers sail directly to Asia or to storage facilities at Fujairah in the United Arab Emirates and elsewhere in the Gulf, where the crude is kept in tank farms part-owned by European companies.

(Source: The Express Tribune)

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