“A senior Iraqi Oil Ministry official told S&P Global Platts that the ministry has been authorized to challenge the legality of the shipment and any other tankers, marking increased tension following recent warming between Baghdad and Erbil,” the UK-based S&P Global Platts reported in a statement on Tuesday.
The Kurdistan Region sends oil through a pipeline terminating at Turkey’s Ceyhan port to ship to world markets.
“The Italian-flagged Neverland departed Ceyhan on June 13 with more than 700,000 b/d, destined for Augusta, Italy, but it turned off its transponder on June 21 just past Gibraltar, heading toward the Atlantic Ocean,” reads the statement.
An advisor for the Kurdistan Regional Government (KRG) Minster of Natural Resources (MNR), Michael Howard, said he was unaware of the ship’s destination, according to Bloomberg News on June 22.
Baghdad and Erbil have been in dispute over the Kurdistan Region’s share of oil revenues since early 2014 when the then Iraqi government under former Prime Minister Nouri al-Maliki cut the Region’s budget over the prospect of independent exports of Kurdish oil to international markets.
“It does feel like a bit of a test case,” Energy Aspects analyst Richard Mallinson told Bloomberg. “Whilst Kurdish oil has found its home in the market, Baghdad hasn’t seemed to want to try and challenge Kurdish exports.”
Although crude oil exports from the KRG have been delivered other places, the Neverland would be the first to voyage across the Atlantic since the United Kalavryta’s attempt to deliver oil to America in 2014, Bloomberg reported.
The United Kalavryta carrying more than 1 million barrels of Kurdish oil was stopped 60 miles off the coast of Galveston, Texas, after the Iraqi Oil Ministry challenged the sale by filing a lawsuit against the KRG in a Houston court.
A US appeals court later stated it had been informed by the Iraqi Ministry of Oil of KRG’s redirecting of the oil tanker to a third country.
The Kurdistan Region is currently exporting around 650,000 barrels of oil per day and is expected to increase its exports, mainly to the Turkish Ceyhan port by pipeline.
The Kurdistan Region announced earlier this month its plan for an independence referendum to be held on September 25.
