U.S. court scraps order to seize Kurdish crude from tanker near Texas

[August 26, 2014]  By Terry Wade and Anna Driver
 
 HOUSTON (Reuters) - A U.S. court on Monday threw out an order to seize some 1 million barrels of disputed Iraqi Kurdish crude oil from a tanker near Texas, a move that could allow the cargo to be delivered and end a nearly month-long impasse.

The United Kalavrvta tanker, carrying about $100 million worth of Kurdish crude, has been anchored in the Gulf of Mexico for weeks, as the Iraqi region of Kurdistan wages a legal battle over ownership with the central government of Iraq.

At the request of Baghdad, the U.S. District Court for the Southern District of Texas in July ordered the U.S. Marshals Service to take control of the cargo, part of a broader strategy by Iraq to push back against Kurdish exports.

But a few days later the court said it lacked jurisdiction to carry out the seizure as the tanker was about 60 miles offshore. That prompted the Kurds to file a request to vacate the order.

"Kurdistan's motion to vacate is granted," U.S. District Judge Gray Miller said in his ruling.

The Kurdistan Regional Government (KRG) has claimed the right to export oil under Iraq's constitution and said it plans to deliver the oil soon. Baghdad says all oil sales outside its control are illegal.

The tanker is too large to enter the port of Galveston near Houston, and companies that provide offloading services to bring cargoes ashore have steered clear of the dispute.

U.S. refiner LyondellBasell has said it had recently bought cargoes of Iraqi Kurdistan crude for its Houston refinery, but said it would halt future purchases and not accept any deliveries until the dispute was settled.

The company did not explicitly say if it had agreed to buy the crude on the United Kalavrvta, and it is not clear if it might now accept delivery of the cargo.

Reuters shiptracking data showed the tanker is still anchored in the Gulf of Mexico.

The judge said Iraq could amend its complaint in the next 10 days, leaving the country's lawyers with an avenue to potentially keep pressing their case.

The Kurds say control over their oil is crucial for their own dreams of independence and because Baghdad has responded weakly to Islamist militants who overran parts of the country in recent months.

Washington has refused to intervene in commercial sales, saying the oil belongs to all Iraqis and supporting a unified Iraq, while warning companies about dealing directly with Kurdistan.

Kurdish authorities meanwhile have continued to make new efforts to get their crude to market even though several vessels carrying their oil have been stuck in limbo.

(Additional reporting by Patience Haggin)

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