UPDATE 2-Iraqi Kurdistan sells latest oil cargo, tanker empty near Israel

Thu Aug 21, 2014 10:31am EDT

Related Topics

* Fourth major Kurdish oil cargo delivered

* Vessel reappears off Israel after disabling satellite tracking

* Israel's Ashkelon port took delivery of 1 mln barrels in June

* Israel has openly voiced support for Kurdish independence (Adds expanded pipeline to Turkey, recasts)

By Julia Payne

LONDON, Aug 21 (Reuters) - An Iraqi Kurdish crude oil tanker has reappeared off the coast of Israel having offloaded its cargo, ship tracking data on Reuters showed, in the latest sign the autonomous region is finding buyers for its oil in defiance of Baghdad.

It was not possible to determine who bought the oil or where it was sent to, but crude originating from Iraqi Kurdistan was delivered to Israel in June even though many Middle Eastern states refuse to trade with the country.

A spokesman for the Kurdistan Regional Government (KRG) Ministry of Natural Resources did not respond to phone calls and emails seeking comment. The KRG has previously denied selling oil to Israel "directly or indirectly".

Baghdad has actively tried to block independent oil sales from Iraqi Kurdistan and cut the autonomous region's budget in January over the dispute, despite complaints from the KRG it needs funds to fight the radical militants of the Islamic State.

But the latest delivery means the KRG has delivered at least four large cargoes or around $400 million worth of crude since May, when it first started major exports via the Turkish port of Ceyhan that is connected to a new pipeline from the region.

In the latest delivery the Kamari tanker switched off its satellite transponder on Aug. 17 before reappearing near Israel two days later having offloaded its cargo.

Growing oil sales could increase the KRG's economic independence from Baghdad and bolster their push to form a separate Kurdish state.

On Thursday Turkish officials and industry sources said the capacity of the Kurdish pipeline has been upgraded to 200,000 barrels per day (bpd) with plans to soon increase it up to 250,000 bpd, doubling its previous capacity.

Iraq's central government in Baghdad has repeatedly called independent Kurdish exports "smuggling", saying only state marketer SOMO has the right to sell Iraqi oil. The KRG says the Iraqi constitution allows it to sell oil independently.

Baghdad has successfully blocked one Kurdish tanker that has now been anchored off Morocco for more than two months, while another was stopped from delivering to a refinery in the United States.

So far, 7.8 million barrels of Kurdish oil have flowed through the independent pipeline of which 6.5 million have been loaded onto tankers. Including the latest tanker more than 60 percent of that oil has now been successfully delivered.

The oil sales come at a crucial moment for Iraq as the Kurdish armed forces, known as peshmerga, have become the main body able to effectively combat the advance of extremist Sunni fighters of Islamic State.

The United States and several European countries have started to supply arms and ammunition to help the Iraqi Kurds. United States air strikes have helped Kurdish forces push back Islamic State in the past two weeks.

Israel's prime minister and several officials openly called for the recognition of an independent Kurdistan this summer, though a Kurdish diplomat later played down coordination between the two countries.

KAMARI TANKER

The Suezmax tanker, Kamari, which can carry up to 1 million barrels of crude, has made two deliveries of Kurdish crude into the eastern Mediterranean since the start of August, tanker tracking data on Reuters shows.

It was partially loaded with Kurdish crude when it turned off its satellite transponder on Aug. 17 as it sailed near Egypt's Sinai Peninsula. When it reappeared on Aug. 19, about 30 kilometres off the coast of Israel, its cargo had been offloaded, based on how high the ship was sitting in the water.

The tanker first loaded its latest cargo of Kurdish crude at the Turkish port of Ceyhan around Aug. 8, and made a partial delivery to Croatia via a ship-to-ship transfer last week.

Hungary's MOL Group said on Monday that it had purchased just under 600,000 barrels of Kurdish crude that discharged at Croatia's Omisalj port at the weekend. The company has exploration and production assets in Iraqi Kurdistan.

Two weeks ago, the same 1 million barrel tanker loaded Kurdish oil at Ceyhan before sailing to a point just under 200 km (125 miles) off the Israeli and Egyptian coasts.

Ship tracking showed the ship was fully loaded, based on its draft in the water. After turning its satellite tracking off on Aug. 1, the ship reappeared four days later sitting far higher in the water, again indicating it had offloaded its cargo.

In June a tanker carrying 1 million barrels of Kurdish oil sailed from Ceyhan that was delivered into Israel's Ashkelon port after first being transferred at sea to another vessel.

The KRG has repeatedly declined to identify buyers of its oil or say who is helping to coordinate the sales. (Writing by David Sheppard; Editing by Michael Urquhart)

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