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Iraqi Kurds export first heavy oil to global market

Baghdad, January 1, 2014

Iraq's Kurdish region has started exports of heavy crude to world markets, traders and industry sources said, a further step to wrestle more control of its lucrative oil sector from the central government in Baghdad.

Trucked through Turkey to a waiting tanker, the sale of Shaikan crude comes just ahead of planned exports of light crude Taq Taq via a new pipeline.

The Kurdish Regional Government (KRG) began selling its oil independently of Baghdad in 2012, first with very light oil condensate, followed by Taq Taq, produced by London-listed oil company Genel.

These exports enraged Baghdad, which considers them smuggling as selling oil falls is handled by under the purview of Iraq's State Oil Marketing Organization (SOMO).

Talks are underway between Iraq and the Kurds to find an agreement over oil exports and revenue sharing, after Arbil and Ankara signed a multi-billion dollar energy package at the end of November, including gas pipelines and exploration deals. Iraq's oil minister said Baghdad would retain control over the oil revenues.

But despite Baghdad's threats of legal action against potential buyers over the last year, the KRG has moved ahead with exporting Shaikan, the first international exports for AIM-listed Gulf Keystone in Kurdistan.

Trading company Powertrans, an intermediary used by the KRG to export its oil from Turkey, has sold a 30,000 tonne cargo of Shaikan loading Jan 6-10, trading sources familiar with the matter said.

The cargo will load at the Delta Rubis terminal at Dortyol on Turkey's bay of Iskenderun, one of the sources said.

Details of the ultimate buyer were unclear as a trader was re-offering the grade.

The Shaikan oilfield is operated by Gulf Keystone, with Hungarian MOL holding a 20 percent interest. Commercial production began in July 2013 with an initial capacity of 10,000 barrels per day (bpd) and output is expected to reach 40,000 bpd in early 2014.

Gulf Keystone was not immediately able to provide a comment to Reuters after several enquiries.

Taq Taq crude is being tested in a newly completed pipeline that links Kurdish oilfields to the Turkish border and then into an existing pipeline already exporting Kirkuk crude for state marketer SOMO to the port of Ceyhan.

The oil successfully reached the Turkish port of Ceyhan for the first time last week.-Reuters




Tags: Iraq | Kurdistan | oil contracts |

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