Tanker with Kurdish crude leaving US after 6-month dispute

HOUSTON-Reuters

REUTERS Photo

After being stuck in legal limbo for six months, a tanker loaded with 1 million barrels of Kurdish crude headed east on Jan. 27 to leave U.S. waters after Baghdad and the Kurds reached a deal to share oil revenue.

The United Kalavrvta tanker, which had been anchored in the U.S. Gulf of Mexico since July, was headed across the Atlantic to Gibraltar, said the vessel’s operator, Marine Management Services, based in Greece. It added that is has not received any orders to discharge the cargo.

Last week, motions filed in a Houston court by lawyers for Iraq and the Kurdistan Regional Government (KRG) showed the vessel would soon have to move to another destination in order to pass special surveys designed to maintain its class certification.

Lawyers also told the court it was possible an agreement over the cargo would likely be reached after Iraq’s government unveiled its proposed 2015 budget to parliament. Those meetings were held earlier on Jan. 27.

The 2015 budget has become a measure of growing goodwill between Baghdad and the Kurdish region as they both fight Islamic State militants. Both sides reached a deal in December over how the handle oil exports, though disputes over cargoes from the semi-autonomous region of Kurdistan that were already at sea have not been fully resolved.

Buyers are unlikely to step forward until the dispute is settled. The cargo’s U.S. buyer refused to accept delivery after Iraq filed a lawsuit to block the sale.

Oil prices fell by half during the standoff in the Gulf of Mexico, ostensibly eroding the value of the cargo, once thought to be near $100 million, while accruing steep freight, waiting time and crew costs.

During the third quarter of 2014, daily freight of a typical Suezmax vessel carrying crude like the United Kalavrvta was between $20,000 and $45,000, according to independent shipping reports.