Aaron Schacter: An oil tanker 60 miles off the Texas coast holds a contentious cargo: one million barrels of crude oil from Northern Iraq worth $100 million. The government of Iraq claims ownership, so to do authorities in the Kurdish region of Iraq. The United Kalavrvta sailed toward Galveston a month ago but has not been able to unload. It is one of five such oil tankers carrying Kurdish oil. Journalist Ben Lando has been following the story for Iraq Oil Report, and Ben, let's follow the oil. Trace the route from Northern Iraq to Texas if you would.
Ben Lando: Sure. Kurdistan produces oil in a handful of fields right now. The oil that they're producing right now flows through a pipeline that they built within their autonomous territory and that they connected to the Iraq-Turkey pipeline just before the border with Turkey, and this is where the issue starts with the Iraqi government, which says that only it can have authority over what oil goes into this pipeline. It goes through Turkey into this pipeline, and into storage tanks in Ceyhan, a port on the Mediterranean coast.
Schacter: OK, so there is a whole lot of Hinckley politics going on right now, and what that means is there are a whole bunch of ships adrift packed with oil. How many tankers are at sea right now with Kurdish oil waiting to unload and who owns them?
Lando: Well it's best to look at it in barrels of oil. Close to 10 million barrels of oil have been shipped from Kurdistan into Turkey. Around seven million barrels of oil have been loaded onto tankers, leaving about three million barrels left in storage in Turkey. We've got two tankers that offloaded into Israel, one that offloaded into Croatia. One that offloaded offshore Malaysia and basically just disappeared onto various other tankers. And that's kind of where it stands. We have the tanker that's offshore Texas right now and the tanker that's offshore of Morocco. That was the actual first tanker that was ever loaded and still stuck offshore Morocco.
Schacter: So we're talking a heck of a lot of money here right, that's just sort of sitting in the ocean in a tanker... in two oceans right?
Lando: Absolutely. There's a lack of transparency in the oil sector globally, and especially when there's a political dispute involved like this. So we don't know exactly how many ships have been loaded, how much oil has been loaded onto every single ship. But we're talking about oil that in a normalized market gets from point A to point B as quick as possible, because the longer it takes the more money it costs, either the shipper or the buyer or both. Here we have oil stuck in tankers because the political risk, the legal risk is so high that it's not worth actually testing it.
Schacter: So Ben where do we go from here? Tens of millions, hundreds of millions of dollars just sitting there, legal case in limbo. What's next?
Lando: It's the political issue more than anything else and so we'll see how that gets solved now that there's a new government in Iraq, a new oil minister. So with the new government in place, we'll see if they're able to reach at least some sort of deal that in the short term gets revenue into Kurdistan and some sort of political cover to allow for exports. But the long term issues over who has control of the oil sector, who has the right to sell the oil. The long term solution of that is probably pretty far away from being solved.
Schacter: Ben Lando is editor-in-chief of Iraq Oil Report. Ben thanks a lot.
Lando: Thank you.