* First crude from Taq Taq oilfield reaches Turkish port
* Fresh tender for Kurdish condensate imminent
* KRG says crude trade through Turkey likely to continue
* KRG oil exports via Baghdad-controlled pipeline halted
By Julia Payne and Peg Mackey
LONDON, Jan 8 Kurdistan has begun to export
crude oil directly to world markets through Turkey, posing the
biggest challenge yet to Baghdad's claim to full control over
The export of crude, in addition to small volumes of niche
condensate, demonstrates the autonomous region's growing
frustration with Baghdad as it moves towards ever greater
economic independence, industry sources said.
Iraqi officials in Baghdad said the trade of Kurdish oil,
which they view as illegal, would make it more difficult to
reach a deal on payments to oil companies operating in the
northern region, which the central government has delayed.
The volume of Kurdish oil involved is small, but industry
sources said the direct export is highly symbolic as the
Kurdistan Regional Government (KRG) seeks more financial
The first crude has been delivered by truck to the Turkish
port of Mersin on the Mediterranean.
"The KRG gave us permission to start crude exports from the
Taq Taq oilfield," Genel Energy President Mehmet Sepil
said in an interview on Monday.
But Baghdad insists that it has the sole right to export.
"If the Kurdistan Regional Government insists on moving in
the wrong direction, even by bartering crude without legal
approval, this will worsen the situation and make it more
difficult to reach an agreement," a senior Iraqi oil official
Oil is at the heart of a deepening rift between Baghdad and
Kurdistan that threatens to undermine the country's uneasy
federal union just a year after the last American troops left.
The KRG halted exports through the Baghdad-controlled
Iraq-Turkey pipeline last month due to the renewed payment
And a KRG source said the crude trade through Turkey was
likely to keep going.
"Crude is a new component in the KRG's ongoing barter deal
with Turkey, and it's likely to continue because Baghdad is not
paying as agreed, nor is it supplying the KRG with sufficient
refined products," the KRG source said.
"So the trade is part of our 17 percent entitlement to
refined products, and the contractors will be able to earn their
share as well, according to their contracts."
An agreement with Baghdad entitles Kurdistan to 17 percent
of oil products refined in Iraq, the KRG source said.
NO OIL EXPORT BREAKTHROUGH
Oil shipments from Kurdistan are unlikely to resume through
the federal pipeline system, with Kurdish and Iraqi Arab
officials increasingly at odds over oil policy and autonomy,
officials and sources said.
Kurdish and Iraqi officials said negotiations to resolve the
dispute are at a stalemate and are now overshadowed by growing
turmoil between Shi'ite Prime Minister Nuri al-Maliki and Sunni
Muslim rivals, who say he has marginalised their community.
Thousands of protesters have taken to the streets in Sunni
Muslim strongholds since December, when demonstrations erupted
after security forces arrested bodyguards of Sunni Finance
Minister Rafaie al-Esawi.
"No date has been set for a meeting between Kurdish regional
officials and Iraqi oil officials to discuss payments and export
issues. I think the current political crisis is preventing a
date being set for a meeting," another Iraqi oil official said.
The KRG began exporting its own very light oil, or
condensate, independently to world markets in October by truck
to a Turkish port, where it was sold via an intermediary.
A fresh cargo of condensate is also ready to sell through an
imminent tender, a shipping source said.
Industry sources reckon around 15,000 barrels per day
(bpd)of condensate from the Khor Mor gas field are reaching the
Toros terminal in Turkey. Just added crude oil exports from Taq
Taq, for now, are also small.
In exchange, Turkey is sending back refined products to the
Kurdish region, which is short of fuel.
Over the past year and a half, Kurdistan has upset Baghdad
by signing deals with oil majors such as Exxon Mobil and
Chevron, providing lucrative production-sharing
contracts and better operating conditions than in Iraq's south.
The KRG says its right to grant contracts to foreign oil
firms is enshrined in the Iraqi constitution, drawn up following
the 2003 invasion that ousted Sunni dictator Saddam Hussein.
But payments to foreign operators in Kurdistan are caught up
in the long-running spat over land and petroleum rights.
Baghdad said last month it would not pay oil firms operating
in Kurdistan because the region had failed to export the volume
of crude it pledged under a deal struck in September.
That agreement stipulated that Kurdistan would pump crude
through the Baghdad-controlled Iraq-Turkey pipeline in return
for payment. An export target of 200,000 bpd was set for the
last two months of 2012, and Kurdish authorities pledged to
raise exports to 250,000 bpd in 2013.
But exports of Kurdish oil have been halted since around
mid-December, after nearing the 200,000 target early in the
Baghdad transferred an initial sum of 650 billion Iraqi
dinars ($560 million) to the KRG. But a second payment is still
pending for the foreign companies in Kurdistan.