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

People & Company News

WCI Applauds Increased USACE Funding

Today WCI applauded the leadership of Senate Appropriations Committee Chairman Thad Cochran (R-MS) and Senate Energy & Water Development (E&WD) Appropriations Subcommittee

SoCal Beach Cleanup Could Take Months

The U.S. Coast Guard captain overseeing cleanup of oil spilled from a pipeline rupture that closed two California state beaches and fouled offshore waters near

MPC Honors Crowley for Tank Vessel Safety

Crowley Maritime Corporation’s petroleum services division has once again been honored by Marathon Petroleum Company (MPC) with its annual Elite Vessel Award, which

Legal

Myanmar Finds 200 Bangladeshis in Offshore Boat

Myanmar's navy found a boat carrying more than 200 Bangladeshis, the government said on Friday, after the military chief said some migrants landing in Malaysia

Two ASC Kalmar Cranes for DP World Brisbane

Kalmar, part of Cargotec, has received an order from DP World Australia to deliver two new Kalmar automatic stacking cranes (ASCs) for its semi-automated terminal in Brisbane.

DP World Extends Title Sponsorship Until 2020

Dubai is set to remain at the epicenter of golf on The European Tour for the foreseeable future after global port operator DP World announced today that it will

Tanker Trends

HSH Bank to Split Off Bad Shipping Loans

German lender HSH Nordbank could split off a "bad bank" for non-performing shipping loans as part of a plan to create a sustainable business model, according to a person familiar with the matter.

Gail to Sell LNG Supplies from US to Shell?

GAIL (India) Ltd has signed a preliminary deal with Royal Dutch Shell for the potential sale of liquefied natural gas (LNG) supply sourced from its portfolio, made up of US production,

How Do You Lose 100 Million Barrels of Oil?

Oil-market watchers are struggling to reconcile the large estimated oversupply in the market with the much smaller buildup of reported inventories and narrowing contango in futures prices.

Energy

US Funding for Air Emissions/Alternative Energy Projects

The U.S. Maritime Administration (MARAD) announced that up to $1.3 million in Federal funding is now available through cooperative agreements for projects supporting

US Oil Platform on Fire in Gulf Of Mexico

An oil platform caught fire and was evacuated in the U.S. Gulf of Mexico offshore Louisiana in the early hours of Friday, though no injuries were reported, the U.

SoCal Beach Cleanup Could Take Months

The U.S. Coast Guard captain overseeing cleanup of oil spilled from a pipeline rupture that closed two California state beaches and fouled offshore waters near

Fuels & Lubes

British Columbia Signs LNG Deal with Petronas

B.C. Premier Christy Clark has announced an agreement in principle with Pacific NorthWest LNG, owned in majority by Malaysia's Petronas, for a liquefied natural

BP, Sinopec JV for Marine Fuel

British oil major BP and China’s Sinopec Fuel Oil have formed a marine fuels bunkering joint venture (JV), BP Sinopec Marine Fuels Pte Ltd.   Under the deal,

US to Export LNG to China

Buyers from China are looking at long term liquefied natural gas (LNG) supplies from US firm Cheniere Energy, news agency Reuters quoted a company official as saying.

Vessels

Torqeedo Introduces New Deep Blue Inboard

Torqeedo now offers a shaft drive version of its 40 and 80 horsepower Deep Blue motor. An electric drive designed for marine use from the ground up, the Deep Blue inboard shares the safety,

HMAS Anzac Visits Portsmouth, UK

The Royal Australian Navy’s helicopter frigate HMAS Anzac has arrived in Portsmouth, England, as part of her NORTHERN TRIDENT 2015 deployment.   Anzac departed Sydney in March 2015,

SCI Back in the Black after 3 Yrs

The Shipping Corporation of India Ltd (SCI), India’s largest shipping company and a Government of India Public Sector Undertaking having reported losses for

Government Update

US Funding for Air Emissions/Alternative Energy Projects

The U.S. Maritime Administration (MARAD) announced that up to $1.3 million in Federal funding is now available through cooperative agreements for projects supporting

WCI Applauds Increased USACE Funding

Today WCI applauded the leadership of Senate Appropriations Committee Chairman Thad Cochran (R-MS) and Senate Energy & Water Development (E&WD) Appropriations Subcommittee

SoCal Beach Cleanup Could Take Months

The U.S. Coast Guard captain overseeing cleanup of oil spilled from a pipeline rupture that closed two California state beaches and fouled offshore waters near

 
 
Maritime Contracts Maritime Standards Offshore Oil Pipelines Pod Propulsion Port Authority Ship Electronics Ship Simulators Shipbuilding / Vessel Construction Winch
rss | archive | history | articles | privacy | 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: 0.1552 sec (6 req/sec)