Kurdistan cargoes warning issued

Jun 13 2014

P&I and insurance concern Skuld has warned about shipments of oil from Iraqi Kurdistan.

At present, this cargo may present a political risk, which members need to be aware of, Skuld said in a bulletin.

The modern Iraqi state consists of several provinces and sub-divided districts, some of which fall within the administrative authority of the autonomous region of Iraqi Kurdistan.

Within that region there are significant energy reserves and to date there is an open issue with respects to the oil originating from that area, as both the local administration and the central government have taken different positions.

The Baghdad central government has said that it considers any oil exports from Iraq, which occur without its consent and authorisation, to be illegal. The responsible central authority is called SOMO.

It has now been reported that in response to recent events, the Italian Industry Ministry provided a letter to traders and refineries in Italy about this issue and the stance taken by Iraq's central government.

Furthermore, the US State Department has also said that it does not condone sales, which bypass the Iraqi central government.

Skuld warned owners, charterers and traders to take an interest in the origin of their cargo. Consequences can include alleged sanction breaches, fines, delays, blacklisting, criminal investigations, unwanted publicity and more. ‘In order to minimise these risks, it is key that commercial teams do their homework,’ Skuld said.

‘It is not enough to consider merely the economics of a proposed transaction, but it requires a real understanding of the trade and its background. A big picture view is needed, rather than a narrow focus purely on the numbers of time and money.

‘Where cargoes come from areas or sources, which are known to be associated with potentially difficult histories and other issues then carrying out further due diligence in advance of agreeing to a proposed transaction can make the difference between a profitable voyage and a voyage with unintended losses and consequences,’ Skuld stressed.

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