By Anjli Raval – Financial Times – Posted 2014-09-05 07:14 GMT – Iraq’s oil ministry is preparing to sue a Greek shipping company for its role in the “illegal” export of crude from the Kurdistan region, marking a renewed effort in Baghdad’s campaign to restrict the Kurds’ ability to market and sell their own natural resources.Baghdad alleges that Athens-based Marine Management Services (MMS) operated five tankers transporting Kurdish Iraqi oil from Turkey, including the United Leadership, the United Emblem, the United Kalavrvta, the United Carrier and the United Dynamic. “MMS is liable for damages of at least $318m, and possibly significantly more, as a result of its willing and active participation in the [Kurdistan Regional Government’s] illegal crude oil export scheme,” the government alleged.
It also accused the ship owner of “repeatedly ignoring warnings that the crude oil it was carrying does not belong to the KRG”. Captain Kyriakos Maragoudakis, MMS’s operations and marine manager, replied by saying: “We are not aware of any such suit being filed by the Iraqi government. If there is a dispute?.?.?.?it is one that should and must be resolved between the Iraqi government and the KRG, either through a political or, failing that, a judicial process.”
“Any lawsuit filed against us by the Iraqi government is misdirected and ill advised and will be robustly defended,” he added. KRG officials did not immediately respond to requests for comment.Baghdad and the KRG have for months been wrangling over the latter’s right to produce and market its natural resources. Although the Kurdish region does not have giant oilfields like those in southern Iraq, it has a vast undeveloped resource base that, if tapped into, could make it a significant player in the energy market. The resulting financial and energy autonomy could also help pave the way toward the region’s long-sought goal of independence. Baghdad has responded by freezing the KRG’s finances, withholding nearly $10bn in budget payments due to the region since the start of the year, according to oil analysts.
In turn, the region has sought out sales of pipeline crude pumped from fields in northern Iraq into an Iraqi-Turkish pipeline which was then transported to the port of Ceyhan. More than 10m barrels of the oil has been shipped from the port since then, Turkey’s energy minister told Reuters.
Although the legal case is not expected to be filed in a Greek court until next week, according to a person familiar with the legal proceedings, Iraq’s oil ministry announced the move on Thursday.
Iraq’s oil ministry said MMS declared false destinations for its tankers, turned off tracking devices to avoid detection and undertook “dangerous” night-time ship-to-ship transfers of crude oil on the high seas.
The United Kalavrvta, which held $100m worth of crude, has been anchored off the coast of Texas since July. Baghdad had asked a US federal court to use admiralty law to block the KRG from moving the 1m barrels of Kurdish crude into US waters. But a Texas judge said he lacked jurisdiction on the matter.
The Iraqi oil ministry is set to file an amended petition in the Texas court on Thursday, the person familiar with the proceedings said.Earlier this week the ministry said it would “not hesitate to prosecute any companies or individuals dealing with illegally exported Iraqi oil, whether by loading, unloading, lightening, transporting or purchasing of such cargos”. The legal dispute is just one of the central government’s many tactics used to deter buyers and curb the KRG’s oil sales.Last month it warned potential buyers of “unauthorised” Iraqi crude that they could be unwittingly helping to fund Isis militants, who are active in the black market. Industry observers have said the statement was also an indirect swipe at the Kurds, who have avoided the country’s official mechanism of selling oil.