Judge orders Kurdish crude seized if unloaded

A federal judge ordered U.S. marshals to seize any crude offloaded from an oil tanker anchored off the Galveston coast carrying 1 million barrels of Kurdish oil.

The Iraqi government sought legal intervention after the tanker United Kalavryta arrived over the weekend carrying crude pumped from a newly opened pipeline linking Kurdish oil fields with a Turkish port and bypassing Iraq’s state oil company, which claims the right to broker all oil produced inside Iraq.

Lawyers representing Iraq’s Ministry of Oil asked the federal court to seize any cargo transferred from the  United Kalavryta onto smaller tankers, a process called lightering, within the court’s jurisdiction, which extends 9 miles offshore.

U.S. Magistrate Judge Nancy Johnson signed the order late Monday, which allows Iraq to take possession of any seized oil and transport it to storage for safekeeping under U.S. Marshals Service supervision.

By Monday afternoon, the ship had not offloaded any crude. It remained anchored about 60 miles off the coast of Galveston early Tuesday morning.

In court filings Monday, a global maritime operator with offices in Houston and Galveston said it was hired by Talmay Trading Inc., a company organized in the British Virgin Islands, to offload the crude but has yet to receive orders or instructions for lightering or delivering the cargo.

In a lawsuit filed against the Iraqi government and Talmay Trading in federal court,  AET Inc. Ltd. and AET Offshore Services asked a federal judge to determine the validity of Iraq’s claim that it owns the crude. The Iraqi government claims the shipment is stolen property.

AET also requested a temporary restraining order to prevent it from executing the contract until the court determines who rightfully owns the cargo.

Reached Tuesday, AET officials declined to discuss details of the contract.

“Cargo types, origins, destinations, sellers, buyers, etc., can be sensitive, proprietary information and we do not discuss these matters publicly,” AET said in a prepared statement. “AET has a long history of supporting and following all rules, regulations and laws and we will not participate in any illegal activity.”

With its disputed cargo now under legal threat, the United Kalavryta may be forced to travel elsewhere to unload.

The U.S. government, which backs a unified, central government in Iraq, discourages companies from buying crude from the Kurdish Regional Government, warning such deals pose significant legal risks. But the government has not banned the purchases.

A buyer for the Kurdish crude has not been identified.