Entry of three tankers banned by Iraq at its crude oil terminals

Shipping market sources said that Iraq has banned three oil tankers -- two Suezmaxes and one Panamax -- from loading at its oil terminals in response to direct exports of crude by the Kurdistan Regional Government over the objections of Baghdad.
In a notification, Iraq's State Oil Marketing Organization, or SOMO, stated, "The United Carrier, the United Dynamic and the Nautilus will no longer be permitted to enter Iraqi oil terminals and other terminals to be used for export of Iraqi crude oil in future."
The notice, issued late last month, did not give reasons for the ban. Market sources with knowledge of the matter said Baghdad was banning the tankers for transporting crude on behalf of the KRG.
Iraq is one of the world's largest exporters of crude and is currently locked in a dispute with the KRG about the sale of oil produced in the region.
A chartering source whose company regularly lifts crude from Basrah, said, "Ships that loaded Kurdish crude have been blacklisted by Iraq."
According to the source, "Maybe they [shipping companies] are getting a high premium [for loading Kurdish] crude and their activity is not reported."
The two oil-loading terminals at the port, Basrah Oil Terminal and Khor Al Amaya Oil Terminal, each export more than 70 million barrels/month of oil, which amounts to more than 70 Suezmax cargoes. Suezmax vessels typically hold 1 million barrels of crude or fuel oil, and Panamax tankers can load up to 400,000 barrels of dirty petroleum products.
The United Dynamic and the United Carrier are managed by Greece-based Marine Management Services. MMS did not immediately response to phone calls and emails to its Greece office.
The Nautilus' owners could not be reached for comment. The KRG has been exporting oil from the region under its control via pipeline to the Turkish port of Ceyhan and then loading it onto ships. So far at least 15 ships have been loaded with Kurdish crude in Ceyhan, according to industry estimates.
Over the last couple of weeks, United Dynamic and another Suezmax managed by MMS, United Emblem, have apparently discharged two more cargoes of Kurdish crude around Southeast and North Asia, according to market sources familiar with the developments.
United Emblem did a ship-to-ship transfer in the South China Sea, a Singapore-based shipping agent said. "Very few [people] want to talk about it," the agent said with reference to the secrecy involved and sensitivity of the matter. Names of receivers of the cargoes were not immediately available.
"All this is being done under the radar for obvious reasons," said a VLCC broker in Singapore. The crude from Kurdistan is available at a heavy discount while ship owners charge higher freight for moving the cargoes, he mentioned.
Unlike Iranian crude, shipping of which has been severely restricted by Western sanctions preventing ships getting insurance, KRG faces no such restrictions and Protection and Indemnity (P&I) clubs do provide cover for ships moving Kurdish crude, the broker said.
After ship-to-ship transfer, the crude gets blended with other grades so the origin cannot be traced and it is sold in smaller parcels to buyers in China and countries in Southeast Asia, market watchers said.
There are at least a dozen VLCCs functioning as floating storage units within and outside Malaysia's Tanjung Pelepas port alone for blending and storage of crude and fuel oil, an official of a global port storage logistics company said.
But many in the tanker market are reluctant to load Kurdish crude when it can lead to being deprived of the lucrative business of Basrah loadings.
A shipping broker mentioned, "The risk in carrying out such trades remains. Iraq's government can appoint lawyers and send sea marshals to get the ship arrested on the grounds that the cargo belongs to them and was sold illegally."