Kurdish Crude Oil Tankships: End-Game Still in Doubt

Posted by George Backwell
Friday, August 01, 2014

After a legal show-down in Texas this week, the outlook for a handful of tankers holding some $300 million worth of Kurdish oil is not looking good.

Seemingly unable to find enough buyers willing to take a risk on million-barrel cargoes of disputed crude, the Kurdish authorities are paying over $75,000 a day to keep all three far-flung vessels afloat. A fourth ship began filling up at a terminal on the Turkish coast on Thursday, potentially adding to the tally, Reuters reported.

Unless they can seal last-minute discreet sales or reach some kind of deal with Baghdad over how to share oil revenues, experts say, chances are slim of unloading ships now dotted around the globe, from Texas to Malaysia. In total, they have already been at sea for nearly half a year.

"There will not be many people who will want to take the cargo in circumstances where there is a dispute about the ownership of it," said Ben Knowles of law firm Clyde & Co.

Iraqi Kurdistan is exporting crude oil independently of Baghdad in a bid toward seizing greater political and economic autonomy, in spite of Baghdad's protests that it has the sole authority to sell Iraqi oil.

"As long as the dispute is rumbling on, it would be very difficult for anyone to use the cargo because they will potentially face exposure if they do," Knowles said.

Kurdistan's biggest U.S. buyer LyondellBasell said on Thursday it will not buy any more of the disputed oil.

In the modern maritime world, satellite vessel tracking technology and a globally networked shipping system make it nearly impossible for the Kurds to quietly unload the vessel at some remote port without the intervention of Baghdad, which says the oil has been illegally sold outside its control.

The ships' fate grew dimmer on Tuesday after Baghdad won a U.S. court order to seize one of those tankers, the United Kalavrvta, which had crossed the Atlantic to anchor a few miles off the port of Galveston at the weekend. While the Federal judge said she lacked jurisdiction as the tanker outside U.S. territorial waters, the message was clear.

While shadowy traders or rogue nations may have been willing to take a chance with the oil in the past, at the right price, the cost of crossing Baghdad and irritating Washington is seen as too great for most global companies. And pariah states like North Korea lack the refineries necessary to utilize the crude. That does not seem to be stopping them from trying.

The partial sale is unlikely to alter the tough task ahead for the Kurds.

Even if the half-cargo gets sold, "the Kurds will get a lower price selling in this kind of way and won't be anywhere next to the market rates they want to achieve," said Richard Mallinson with consultants Energy Aspects in London.

"It has proved to be more difficult than they expected because Baghdad has used a combination of diplomatic pressure with governments it has relations with, legal warnings to potential buyers and the action with the tanker in the U.S. That will have sent a message to most buyers," Mallinson said.

The Kurds have seized on recent sectarian chaos in Iraq to expand their autonomous northern territory to include Kirkuk, which sits on vast oil deposits.

(By Jonathan Saul)

Maritime Reporter January 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

People & Company News

Matson Announces Quarterly Dividend

Matson, Inc. declared a first quarter dividend of $0.17 per common share, the company’s board of directors announced. The dividend will be paid on March 5, 2015

Hogan Named VP at Newport News Shipbuilding

Rob Hogan has been appointed vice president of manufacturing at the Newport News Shipbuilding division of Huntington Ingalls Industries (HII), the company announced.

Kongsberg Expands Louisiana Office, Training Facility

Kongsberg Maritime has purchased approximately 5.2 acres for new construction on an 82,980 sq ft office and training facility. Construction on the James Business

Legal

Bill Proposed to Repay WWII Merchant Mariners

Congresswoman Janice Hahn (Calif.) and Congressman John Duncan Jr. (Tenn.) introduced the “Honoring Our WWII Merchant Mariners Act of 2015,” which would provide

Shell: UK Should Reduce North Sea Oil Tax

The British government should review a supplementary tax charge on North Sea oil producers as it has made the operation of some fields unrealistic, Shell Chief

China Watching Greece After Port Sale Shelved

China is closely monitoring the policies of the new Greek government after Athens said this week it will stop the sale of a majority stake in Greece's biggest port,

Tanker Trends

Stolt-Nielsen Q4 Profit Misses Forecast

Shipping firm Stolt-Nielsen reported fourth quarter earnings below forecasts on Thursday and said it was concerned about the outlook for the chemical tanker market,

Wartsila Sees Low Oil Price Impacting Shipping

CEO cautious on 2015 outlook. Finnish ship engine and power plant maker Wartsila reported a smaller-than-expected quarterly profit and warned lower crude prices

Shipping Pollution Will Skyrocket -Study

International freight volumes will grow fourfold by 2050 while the average length of haul will increase by 12 percent over that time, trends that will cause a spike

Energy

Damen Delivers Custom-Made Offshore Winches to Fugro

Damen Maaskant Shipyards, part of Damen Shipyards Group, has delivered two dedicated offshore winches to Fugro. The Dutch shipyard was responsible for the design,

Stolt-Nielsen Q4 Profit Misses Forecast

Shipping firm Stolt-Nielsen reported fourth quarter earnings below forecasts on Thursday and said it was concerned about the outlook for the chemical tanker market,

Shell: UK Should Reduce North Sea Oil Tax

The British government should review a supplementary tax charge on North Sea oil producers as it has made the operation of some fields unrealistic, Shell Chief

Fuels & Lubes

Liberian Registry Launches Green Ship Initiative

“We have launched a new initiative to help shipowners improve their green credentials and meet other corporate social responsibilities," said Scott Bergeron, CEO

Stolt-Nielsen Q4 Profit Misses Forecast

Shipping firm Stolt-Nielsen reported fourth quarter earnings below forecasts on Thursday and said it was concerned about the outlook for the chemical tanker market,

Shell: UK Should Reduce North Sea Oil Tax

The British government should review a supplementary tax charge on North Sea oil producers as it has made the operation of some fields unrealistic, Shell Chief

Vessels

Maintenance Woes Led to Digby Ferry Grounding

Maintenance deficiencies and inadequate emergency procedures led to November 2013 grounding of Princess of Acadia in Digby, Nova Scotia    Maintenance deficiencies

Ferus Smit to Launch Newbuild for Symphony Shipping

Ferus Smit announced it will launch Newbuuld 417 on Saturday, February 21 in Leer.   Newbuild 417, a multipurpose vessel to be christened Nordana Sky, is the

Australia Gives Landing Craft to the Philippines

The Australian Government will gift two recently-decommissioned Landing Craft Heavy vessels, including a package of spare parts, to the Philippines Government,

 
 
Maritime Careers / Shipboard Positions Maritime Contracts Maritime Security Maritime Standards Naval Architecture Pod Propulsion Port Authority Salvage Ship Electronics Sonar
rss | archive | history | articles | privacy | terms and conditions | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1498 sec (7 req/sec)