Tanker Hauling Disputed Kurd Crude U-Turns in Atlantic Ocean

Jun 03, 2014 8:03 am ET

(Updates with Morocco port details in third paragraph.)

June 3 (Bloomberg) -- An oil tanker shipping crude from Iraq’s semi-autonomous Kurdish region turned back after getting almost 200 miles across the Atlantic Ocean, amid a challenge over the shipment’s legality.

The United Leadership, able to haul 1 million barrels, signaled that it was about 5 miles off Mohammedia in Morocco at about 6 p.m. local time yesterday, according to information entered by the ship’s crew and captured by Coulsdon, England- based IHS Maritime. It turned back on May 30 after getting about 190 miles west of Gibraltar, at which point it was sailing to the U.S. Gulf. The shipment is illegal, SOMO, Iraq’s oil marketing company, said yesterday.

The tanker “has arrived at its destination,” Kurdish news website Rudaw reported late yesterday, citing Safeen Dizayee, a spokesman for the Kurdistan Regional Government. The tanker is close to the port of Mohammedia in Morocco, tracking data show. Representatives from the facility are meeting their counterparts at the local refinery, port officer Afifa Loughzail said by phone. At least seven calls to Mohammedia refinery officials weren’t returned.

“There will be a lot of attention focused on where that tanker heads because it is potentially a milestone, the first cargo,” Richard Mallinson, an analyst at Energy Aspects Ltd. in London, said by phone. “That would discourage any potential buyers. It may also limit the Kurds’ options, it may force them to accept discounts on the price that they can sell for.”

Escalating Dispute

Three calls to the Kurdish Regional Government’s natural resources ministry weren’t answered and an e-mail wasn’t returned. United Leadership is owned by Marine Management Services MC, according to a database IHS maintains for the United Nations’ shipping agency. Four calls to the company’s offices in Piraeus, Greece yesterday weren’t returned and the line went dead when Bloomberg News asked for an e-mail address for Marine Management’s directors. A message to the company’s generic e-mail address wasn’t immediately returned.

The KRG estimates its region has about 45 billion barrels of crude reserves. Iraq itself has about 150 billion barrels. A dispute between the two sides escalated last month when the Kurds began pumping oil through their own pipeline to Ceyhan, the Turkish port in the Mediterranean sea from where ship tracking data show United Leadership loaded its cargo.

Arbitration

Iraq said May 23 it sought arbitration over Kurdish oil sales at the International Chamber of Commerce. SOMO said June 1 that buyers should not purchase the cargo. The KRG says it’s abiding by the Iraqi constitution, according to its website. Shipping signals can be wrong because much of the information is entered manually and because not all data are captured.

“Nowadays, due to technology, it has become easy to track any shipped oil and anyone who will deal with this oil may face problems,” Asim Jihad, a spokesman for Iraq’s oil ministry, said by phone yesterday.

Disputes about cargoes sometimes delay merchant ships. A tanker called the ETC Isis spent months marooned off Singapore in 2012 as part of a dispute between northern and southern Sudan. Earlier this year, U.S. special forces boarded a tanker shipping crude from eastern Libya that the nation’s government said was illegally shipped.

--With assistance from Naomi Christie in London, Ramsey Al- Rikabi in Tokyo, Maher Chmaytelli in Dubai and Souhail Karam in Rabat.