Seized tanker with Kurdish oil ‘out of US ruling’

ISTANBUL - Reuters

A still image from video taken by a US Coast Guard aircraft shows the oil tanker United Kalavyrta that is carrying a cargo of Kurdish crude oil. REUTERS photo

A high-stakes dispute over a tanker carrying $100 million in Iraqi Kurdish crude took a surprising turn when a U.S. judge said she lacked jurisdiction given the ship’s distance from the Texas shore and urged that the case be settled in Iraq.

Federal magistrate Nancy K. Johnson said that because the tanker was some 60 miles (100 kilometers) offshore, and outside territorial waters, an order she issued on the late hours of July 28 for U.S. Marshals to seize the cargo could not be enforced. She said the dispute between Iraq’s central government and the autonomous region of Kurdistan should be resolved in Iraq.

Overnight Johnson signed an order directing the marshals to seize the 1 million barrels of crude from the United Kalavyrta tanker anchored in the Gulf of Mexico. She scheduled a conference to give the two sides a chance to state their case on July 29.

The ship could simply sail away, though it also could offload its cargo for delivery to another U.S. Gulf of Mexico port outside of Texas, lawyers said.

Baghdad fails its duties, KRG tells US in letter

Baghdad’s lawyers had laid claim to the oil in a lawsuit filed on July 28, saying Kurdistan sold the crude without permission from the central government.

The Kurdistan Regional Government (KRG) said July 30 it had sent a letter to a U.S. court in Texas over the seizure attempt. In the letter, the KRG asserts that Baghdad has failed to fulfil its obligations in Kurdistan, boosting the region’s need to export oil as it contends with the influx of more than one million refugees in recent months due to violence sparked by Islamic State insurgents.

“The federal government cannot win, because our crude is legally produced, shipped, exported, and sold in accordance with the rights of the Kurdistan Region as set forth in the Iraqi constitution,” KRG Natural Resources Minister Ashti Hawrami said in a statement on the KRG’s web site.

A lawyer in Houston for the Kurds said the regional government would file its own claim of ownership for the cargo, a sign the legal standoff might continue.

Meanwhile, a Kurdish government official said export plans would be hurt.

“We have to acknowledge that the ruling of the U.S. court will definitely have negative consequences on the region’s attempts to market its oil,” he said of the order to seize the cargo. “Buyers now will start to step back and think twice before purchasing Kurdish crude.”

Officials from the State Department and the U.S. Marshals Service said the judge’s order could only be applied if the ship entered U.S. territory.