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Iraq launches legal action against Turkey over oil sales

Following Turkey's announcement that it will sell Iraqi oil from Kurdistan, Iraq files for arbitration, says Turkey is breaching agreement
The Kirkuk-Ceyhan pipeline has been subject to stoppage and violent attacks (AFP)

Baghdad launched legal action against Ankara Friday after oil from Iraq's autonomous Kurdish region was exported to international markets without the cental government's consent, potentially worsening already-poor ties between the neighbours.

The sudden decision to call for arbitration by Iraq, which came after shipments began on Thursday evening, is the latest move in a years-long row in which Baghdad has insisted it has the sole right to export Iraqi crude.

The dispute over the exports, which the US has said could further destabilise Iraq, also throws into doubt Prime Minister Nuri al-Maliki's bid for re-election after polls last month, with his campaign expected to hinge on whether or not he can secure Kurdish backing.

Iraq's oil ministry said in a statement that it has "filed a request for arbitration against the Republic of Turkey and its state-owned pipeline operator BOTAS... with the International Chamber of Commerce (ICC) in Paris."

"By transporting and storing crude oil from Kurdistan, and by loading that crude oil onto a tanker in Ceyhan, all without the authorisation of the Iraqi Ministry of Oil, Turkey and BOTAS have breached their obligations under the Iraq-Turkey Pipeline Agreement," it said.

The ministry said it was asking the ICC to order Turkey and BOTAS to "cease all unauthorised transport, storage and loading of crude oil," and added it was seeking financial damages of more than $250 million.

Earlier on Friday, Turkish Energy Minister Taner Yildiz confirmed reports that Kurdish oil is being exported internationally after a six-month cessation.

Some 1.4 million barrels of the oil, which has been accumulating in the south-eastern Turkish port of Ceyhan as negotiations continued between authorities in Iraqi Kurdistan and Iraq’s central government, was loaded onto ships late Thursday. 

Turkey, Yildiz said, is ready to facilitate oil sales from Iraqi Kurdistan to international markets.

On Thursday, Iraq’s Oil Ministry announced a nearly 6 percent increase in exports of crude oil for April.

This increase comes despite the halting in March of exports through the Kirkuk-Ceyhan pipeline which the ministry closed as a result of “repeated terrorist operations targeting the pipe," ministry officials said.

On 28 April, the Kurdish government announced that oil stored at Ceyhan would be sold without approval from Baghdad, which seeks a majority share of profits from the oil.

The oil will be sold to Germany and the Mediterranean markets, most likely to Italy, Yildiz revealed on Friday.

However, Yildiz gave no further information on whether a formal agreement had been made about the sale.

"If Iraq pumps more, we will transfer and sell their oil to the international markets," he said when asked whether exports will continue.

Yildiz emphasized that the oil and its sale are a matter for the whole of Iraq, stating that any remaining oil in Ceyhan “will be traded by the Iraqis not by the Turkish government."

In January, Iraq's Oil Ministry announced that it had taken steps towards launching a lawsuit against Turkey for its participation in the "smuggling" of oil from Kurdistan via the Kirkuk-Ceyhan pipeline.