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Established in 2006 as a Community of Reality

Welcome to the Neno's Place!

Neno's Place Established in 2006 as a Community of Reality


Neno

I can be reached by phone or text 8am-7pm cst 972-768-9772 or, once joining the board I can be reached by a (PM) Private Message.

Established in 2006 as a Community of Reality

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Established in 2006 as a Community of Reality

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    A long investigation into the "smuggling" of Kurdistan's oil... an incomprehensible "maze" and most

    Rocky
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    A long investigation into the "smuggling" of Kurdistan's oil... an incomprehensible "maze" and most Empty A long investigation into the "smuggling" of Kurdistan's oil... an incomprehensible "maze" and most

    Post by Rocky Fri 12 Jul 2024, 4:17 am

    A long investigation into the "smuggling" of Kurdistan's oil... an incomprehensible "maze" and most of it through Iran

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    Baghdad Today - Follow-up
    A lengthy report by Reuters revealed the smuggling of oil from the Kurdistan Region of Iraq to Iran and Turkey via hundreds of tankers, indicating that these operations, which generate $200 million a month, are a "maze", as the money does not go to the treasury of the regional government, but rather the oil is sold by foreign companies to contractors, and these contractors smuggle the oil via tankers at a rate of a thousand trucks per day, most of them to Iran and to a lesser extent to Turkey.
    Hundreds of oil trucks leave daily from sites near Erbil, the capital of Iraq's Kurdistan region, to Turkey in the north and Iran in the east, causing traffic gridlock on the region's winding mountain highways, the agency added. The trucks represent the most visible aspect of a massive operation to transport oil from the region to Iran and Turkey in opaque, informal deals that have been rampant since the closure of an official export pipeline last year.
    Reuters gathered details of the trade through interviews with more than 20 people, including Iraqi and Kurdish oil engineers, traders, government officials, politicians, diplomats and oil industry sources.
    These details painted a picture of a thriving trade in which more than 1,000 trucks carry at least 200,000 barrels of low-priced oil daily to Iran and, in smaller quantities, to Turkey, a trade that generates about $200 million a month.
    Iraqi officials said the size of the unofficial exports, which have not been previously reported, is one reason why Iraq has been unable to comply with production cuts agreed by the Organization of the Petroleum Exporting Countries (OPEC) this year. Iranian and Turkish officials did not respond to requests for comment.
    Asim Jihad, spokesman for the Iraqi Oil Ministry, said that the Kurdish trade did not receive the approval of the Iraqi government, and that the Iraqi state oil marketing company (SOMO) is the only official body authorized to sell Iraqi crude.
    He said the government does not have accurate figures on the quantities of oil being smuggled to Iran and Turkey.
    "OPEC is now less tolerant of smuggling and is known to impose punitive measures on members who violate the agreement," said Jim Krane, an expert at the Baker Institute at Rice University in Houston. "I doubt we will see any reaction against Baghdad because the Kurdish region is known to be outside the control of the central authorities."
    A US official noted that this trade could also put Kurdistan on a collision course with its close ally Washington, which is assessing whether this trade violates any US economic sanctions on Iran.
    No trace of oil revenues
    According to sources, oil officials and diplomats, trucks soon began transporting Kurdish oil to the two neighboring countries, and the pace of trade has accelerated this year after talks to reopen the pipeline stalled.
    Local officials said there was no accounting or recording of any revenue from the trade in the coffers of the Kurdistan Regional Government, which is struggling to pay the salaries of thousands of public sector employees.
    “There is no trace of oil revenues,” said Ali Homa Salih, a lawmaker who was head of the Kurdistan parliament’s oil committee before it was dissolved in 2023. He estimated the trade at more than 300,000 barrels a day, higher than most other estimates.
    Hiwa Mohammed, a senior official in the Patriotic Union of Kurdistan, one of the two ruling parties in the region, said that the oil passes through the border crossings with the knowledge of the regional and Iraqi authorities.
    Officials from the Kurdistan Regional Government did not respond to requests for comment. There is no official spokesman for the KRG’s Ministry of Natural Resources, which oversees Kurdistan’s oil trade.
    A US official said Washington is scrutinizing the oil trade to assess compliance with sanctions on Iran.
    The US Treasury declined to comment.
    "US sanctions on Iran remain in place, and we engage regularly with our partners regarding sanctions implementation, but we do not disclose details of those conversations," a State Department official said.
    A senior official in the Kurdistan Ministry of Natural Resources said that the region's oil production is 375,000 barrels per day, 200,000 of which are trucked to Iran and Turkey and the rest refined locally.
    "No one knows what will happen to the revenues of 200,000 (barrels per day) that are smuggled abroad, or the oil derivatives sold to the region's refineries," said the official, who asked not to be named due to the sensitivity of the matter.
    Low prices for crude oil
    Oil companies in Kurdistan are selling crude oil to local buyers at discounted prices of $30 to $40 a barrel, about half the global price of Brent crude, generating revenues of at least $200 million a month, political and oil industry sources said.
    Eight international oil companies control the majority of oil production in Kurdistan: DNO, Genel Energy, Gulf Keystone Petroleum, Shamaran Petroleum, HKN Energy, Western Zagros, MOL subsidiary Kalergan and Hunt Oil.
    U.S.-based Hunt Oil declined to comment. The other seven companies did not immediately respond to requests for comment, nor did local KAR Group, a major player in Kurdistan.
    While most oil production was halted when the pipeline was shut, some companies, including DNO, Keystone and Shamaran, said in statements that they have since started producing crude oil to sell to buyers inside Kurdistan.
    Shamaran said the average price of crude oil it sold in the first three months of 2024 was $36.49 per barrel, while Keystone said in June that crude sales from the Shaikan field this year were generating about $28 per barrel.
    Authorised local buyers take crude from oil companies and sell it through brokers for export, without the knowledge of producers, industry sources said.
    Most political and oil sector sources said the vast majority of oil trucked to Iran goes through official Iraqi border crossings, including Haj Omran or through Penjwin in the south.
    Political, diplomatic and industry sources said crude oil is loaded from there onto ships at Iranian Gulf ports in Bandar Imam Khomeini and Bandar Abbas, a trade route used in the past for Kurdish oil exports, or transported overland to Afghanistan and Pakistan.
    Reuters was unable to determine how Iran, which has struggled to sell its oil products due to sanctions, benefits from the trade, nor who is getting the oil in Iran.
    The oil is being sent to Iran to be refined into gasoline, said Mohammed, a senior official in the Patriotic Union of Kurdistan.
    Pakistan's oil ministry declined to comment. Afghan officials did not respond to requests for comment.
    Black Market Maze
    The trade is the latest iteration of Iraq's long-running black market oil trade, widely seen as benefiting political elites closely linked to business interests.
    Twelve people said that officials in Kurdistan's two ruling parties, the Kurdistan Democratic Party, to which the Barzani clan belongs, and the Patriotic Union of Kurdistan, to which the Talabani clan belongs, are the beneficiaries.
    “There is a maze of black market salespeople getting paid and people approving those sales,” said a source involved in the Kurdish oil trade. “It doesn’t mean they just turn a blind eye, they get their cut.”
    Political interests are so tied to trade that resuming official exports via the pipeline, once seen as a priority, has fallen down the diplomatic agenda, said a senior diplomat in Baghdad.
    KDP officials did not respond to requests for comment on the black market trade. Mohammed, the PUK official, would not comment on who might be behind it.
    Kurdish officials say the region has been forced into the trade by the pipeline closure, which they see as part of broader attempts by Iranian-backed Shiite parties in Baghdad to curtail the relative autonomy Iraqi Kurdistan has enjoyed since the end of the first Gulf War in 1991.
    A senior Iraqi parliamentary official familiar with oil affairs said Baghdad was aware of the details of the trade but was avoiding public criticism as officials sought to resolve outstanding disputes with Erbil.
    The source, who requested anonymity due to the sensitivity of the issue, added that pressuring Erbil to stop oil smuggling would reduce the region and deprive it of all sources of funding, which could lead to its collapse.
    Iraqi officials have privately cited black market oil trading as the reason behind Baghdad's inability to meet its OPEC production quotas, a point of contention with OPEC's de facto leader Saudi Arabia.
    The large number of trucks that crowd the highways and sometimes get into accidents also angers residents.
    "It's very painful," said Rashid Dalak, as he visited the grave of his brother Rozgar, who was killed in an accident with a truck last May on the Erbil-Sulaymaniyah highway leading to the Iranian border.
    "Despite the crossings on our roads, destroying them and killing our loved ones, no one here has seen a dollar," he explained.
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