Kurdistan bypasses Baghdad; looks to more buyers for oil

For the first time, Kurdistan Regional Government (KRG) has revealed its plan of exporting oil. The semi-autonomous region in Iraq has also decided to enhance export volume to earn more money to fund its activity for the Islamic state.

Kurdistan has successfully bypassed Baghdad in oil exports. The Iraqi government says the Kurds are not respecting the pact to ensure the agreed oil supply to Baghdad.

The Iraqi government has already filed few lawsuits against those who involved in KRG's oil exports.

Regardless of Baghdad's opinion, Kurdistan Regional Government is going ahead with its plans on oil exports. Ashti Hawrami, Kurdistan Minister for Natural Resources, said that successfully avoiding Baghdad's detection, oil was channeled through Israel.

The Kurdistan has made arrangements on transferring oil between ships off the coast of Malta and using decoy ships making it difficult for Baghdad to track.

There's a difference of opinion between Kurds and the Iraqi government. Kurdistan says it's inevitable for them to bypass Baghdad to export oil as Iraqi government's refusal to honor budget allocations for KRG in 2014 and 2015.

Whereas Iraqi government complains that Kurds are not respecting the agreement on agreed oil supply volume to Baghdad.

Kurdistan has right to get 17 percent in Iraq's budget allocations. Kurds need money to take care of over one million refugees from Syria and also to pay its bills. It's estimated that Kurdistan is exporting 500,000 barrels per day (BPD) of oil to 10 countries.

According to reports by Reuters, Kurdistan waited for long in expecting budgetary support from the Iraqi government.

Hawrami explained when they didn't receive the budget, they decided to start thinking about independent oil sales.

Kurds have completed establishing oil pipeline and are looking for more buyers for oil.

"The scale was huge. And it was a totally new game for us. Buyers wanted the KRG to lease its own crude cargo ships. We knew nothing about the shipping or sea transportation industry", Hawrami said.

The Regional Government has hired a veteran oil expert, Murtaza Lakhani, to assist finding ships for oil exports. Lakhani had previously worked for Glencore in Iraq.

"He knew exactly who would and who wouldn't deal with us. He opened the doors to us and identified willing shipping companies to work with us," said Hawrami.

With Baghdad threatening to take legal action against buyers, whoever purchases oil from Kurds. Major oil companies such as Exxon Mobil and BP are hesitating to take any decision as they have joint ventures in Baghdad.

Iraq has already filed legal cases against Marine Management Services, a Greek shipping company, for being involved in Kurdish exports. Several trading firms have been involved in Kurds' oil exports.