Kurds threaten legal action against Iraq oil buyers

ARBIL, Iraq, July 9 Wed Jul 9, 2014 4:55pm EDT

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ARBIL, Iraq, July 9 (Reuters) - Iraqi Kurdistan threatened on Wednesday to take legal action against buyers of the country's oil unless the autonomous region is paid its share of revenue from any sales.

The Kurdistan Regional Government (KRG) said buyers of Iraqi oil were complicit in violating the constitution because the Baghdad central government has cut the region's 17 percent entitlement of the national budget.

It is unclear whether the threat will influence major buyers of Iraqi crude, but it nevertheless illustrates the KRG's increasingly assertive stance in a long-running dispute with Baghdad over control of its natural resources.

Baghdad has slashed the KRG's budget since January as punishment for the region's moves to export and sell oil directly on international markets, also threatening legal action against buyers of Kurdish crude.

"The KRG has the right, in circumstances where the Iraqi federal government is not sharing revenues in accordance with the Iraqi constitution, to take such action as the KRG considers appropriate to obtain all entitlements the Iraqi federal government is required to pay to the KRG under the Iraqi constitution," said a statement from the region's Ministry of Natural Resources in Arbil.

"Buyers who fail to make such payments to the KRG will be facilitating the Iraqi federal government's breach of the KRG's rights and passing to the Iraqi federal government monies that rightfully belong to the KRG."

Last week, the Kurds threatened to counter-sue the federal government for trying to block its sales in a strongly worded letter that reflects growing confidence as Baghdad struggles to counter insurgents that have overrun swathes of the country.

The dispute has intensified since the Kurds began exporting oil via a new pipeline to the Turkish port of Ceyhan earlier this year.

The autonomous region has been exporting around 125,000 barrels per day to Ceyhan and plans to double that number, but has so far struggled to sell some of the tankers as potential buyers have come under pressure from Baghdad.

Of the four tankers that have loaded the KRG's pipeline oil since May, only one has successfully delivered into an Israeli port after executing a ship-to-ship transfer in the Mediterranean. The buyer has not yet been revealed.

The destinations of the other 3 remain unclear. One has been sitting off the coast of Morocco, another is shown by tanker tracking data to have sailed through the Suez Canal this week with its destination listed as South Africa. Details about the third tanker are not known.

(Reporting by Isabel Coles and David Sheppard; Editing by Mark Heinrich)

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