The first tanker heavy with Kurdish crude sailed for Europe late Thursday from the Turkish port of Ceyhan, marking a milestone for Iraqi Kurds who have been aching for greater economic independence from Baghdad.
The Kurdistan Regional Government (KRG) confirmed the start of Kurdish oil sales via a pipeline to Ceyhan, in a statement that left no doubt Erbil is opening its first large crude exports without a deal with Baghdad.
“The Kurdistan Regional Government has completed the first sales of crude oil produced in the Kurdistan Region and piped to the port of Ceyhan,” the KRG said.
“A tanker loaded with over one million barrels of crude oil departed last night from Ceyhan towards Europe,” it added. “This is the first of many such sales of oil exported through the newly constructed pipeline in the Kurdistan Region.”
The oil issue has been at the center of one of the worst rows between the autonomous Kurds and the Shiite central government in Baghdad.
Erbil opened its new pipeline to Ceyhan in December, but after strong opposition from Baghdad Ankara said it would hold off on allowing the sales until consent from the central government.
But after months of bickering and acrimony, including Baghdad freezing Erbil out of the national budget for months, no agreement was reached.
Turkish Energy Minister Taner Yildiz, who had warned that storage tanks at Ceyhan for Kurdish oil were filled to capacity with 2.5 million barrels of piped Kurdish gas, confirmed Thursday that the first oil sales had begun.
The bone of contention between Erbil and Baghdad has been over who controls revenues. The Kurds rejected demands by Baghdad that the sales should be conducted by the State Oil Marketing Organization, inviting SOMO only as an observer.
The latest KRG statement said that revenue from the sales would be deposited in a KRG-controlled account at Turkey’s Halkbank. It said it would be “treated as part of the KRG’s budgetary entitlement under Iraq’s revenue sharing and distribution as defined under the 2005 Constitution of Iraq.
“Meeting Iraq’s continued international UN obligations, five percent of the sales revenue will be set aside in a separate account for reparations,” the statement said.
“The KRG has invited independent bodies to observe the sales and export process in line with the KRG’s commitment to transparency. KRG also hopes that officials from SOMO (the federal Iraqi oil marketing organization) accept KRG’s invitation to observe the process,” the statement said.
It said the KRG would “continue to exert its rights of export and sell oil independently of SOMO but remains committed to negotiate in good faith with its counterparts in Baghdad to reach a comprehensive settlement on oil issues within the framework of Iraq’s Constitution.
The Kurds have chosen an opportune moment to begin the sales: Iraqi Prime Minister Nouri al-Maliki, who is making an uphill bid for a third term following elections last month, cannot fulfill the ambition of keeping his job without political support from the Kurdish bloc in parliament.
The KRG is infuriated at Maliki, who has very little room to pressure Kurdish leaders any further.
The oil revenues are expected to go a long way to ease Kurdistan’s tight cash flow, following the cash freeze from Baghdad.
Baghdad has maintained that Kurdish oil sales are illegal. Late last year, the Iraqi government hired a US firm to sue any buyer of Kurdish oil in Turkey.
In turn, the Kurds have threatened to go so far as to declare independence unless Baghdad grants them greater control over their rights and resources.