Iraq threatens to seize oil shipments, sue dealers

[January 11, 2013]  BAGHDAD (AP) -- Iraq has threatened to seize oil exports made without its consent and sue companies dealing in what it sees as contraband crude just days after the country's self-rule Kurdish region began unilaterally exporting oil.

The spokesman for Iraq's Kurdish regional government, Safeen Dizayee, confirmed Friday that the largely autonomous territory began shipping oil unilaterally to Turkey in the past few days. He declined to say how much was being shipped abroad.

The move appears to have triggered Baghdad's threat. A statement quietly posted a day earlier on the website of the State Oil Marketing Organization warned that Iraq may confiscate what it sees as oil cargoes "smuggled across borders," and sue sellers, buyers and companies that transport the crude.

The statement said SOMO "is the sole legally authorized entity that has the exclusive right to export and import crude oil, gas and oil products" in Iraq.

A hard line from Baghdad over the shipments could exacerbate simmering tensions between Iraq's central government and the Kurds. The two sides appeared on the brink of war just two months ago after an exchange of fire prompted them to deploy troops and heavy weapons along their disputed internal border.

Iraq's central government and the Kurds have been at loggerheads for years about how to manage Iraq's vast oil wealth.

Since the 2003 U.S.-led invasion, the Kurds have struck more than 50 deals with foreign oil companies, including Exxon Mobil Corp., Chevron Corp. and France's Total S.A. Baghdad considers the deals illegal. It believes the central government should manage the country's oil policy and wants all exports to travel through state-run pipelines.

Dizayee said the Kurds are shipping the oil into Turkey by tanker truck. Much of the exported crude will be refined and then shipped back to the Kurdish region, which has a pressing need for fuel during the cold winter months, he said.

He insisted that the Kurds remain open to talking with Baghdad about the new exports within the framework of a comprehensive negotiation.

"If we need to address this issue, we need to address it as a complete package," he said.

The Kurds last month suspended oil exports through a pipeline managed by Baghdad over a payment dispute with the central government. Those exports fall under a tentative 2011 deal which calls on the Kurds to send the oil to Baghdad, which sells it, and pays 50 percent of the revenues to oil companies to reimburse their development costs.

Iraq sits atop the world's fourth-largest proven reserves of conventional crude, with about 143.1 billion barrels. Oil revenues make up 95 percent of the country's budget -- a portion of which is earmarked for the Kurdish region.

[Associated Press; By ADAM SCHRECK]

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