Iraq seeks arbitration on oil sale
Baghdad, May 24, 2014
Iraq has filed for arbitration against Turkey after European markets bought the first load of oil to be carried by pipeline from Iraqi Kurdistan.
The request was filed with the Paris-based International Chamber of Commerce and also targets Turkish state-owned pipeline operator BOTAS for its role in facilitating oil exports from Kurdistan without the Iraqi federal government's consent.
"By transporting and storing crude oil from Kurdistan, and by loading that crude oil onto a tanker in Ceyhan, all without the authorisation of the Iraqi Ministry of Oil, Turkey and BOTAS have breached their obligations under the Iraq-Turkey Pipeline Agreement," the government said.
Both BOTAS and Turkey's Ministry of Energy said they had yet to receive any information about the arbitration from either the ICC or the Iraqi government.
The Kurdistan Regional Government (KRG) said the tanker, carrying more than one million barrels of crude, was bound for Europe, and that revenues from the sale would be deposited in Turkey's Halkbank.
Kurdistan finished building the pipeline last year and has been using it to pump oil into storage tanks at Ceyhan, bypassing the state-run system. Before that, the Kurds exported smaller volumes by truck.
"This is the first of many such sales of oil exported through the newly constructed pipeline in Kurdistan," the KRG said.
It added that the oil revenue would be treated as part of the region's share of the Iraqi national budget. Baghdad has cut funds to the region this year as punishment for the Kurds' moves to export crude independently.
The KRG said it remained open to negotiations with Baghdad and would comply with UN obligations by setting five per cent of the revenue aside in a separate account for reparation for Iraq's invasion of Kuwait in 1990.
Turkish Energy Minister Taner Yildiz said the first cargo had been sold into the Mediterranean spot crude market. "This crude oil will possibly go to Italy or Germany," he said in comments broadcast on TRT television.-Reuters