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Dispute over tanker's Kurdish oil continues in Houston court
A photo taken from a U.S. Coast Guard HC-144 Ocean Sentry airplane shows the tanker United Kalavryta underway in the Gulf of Mexico on July 25, 2014, before it anchored off Galveston with a load of oil from Kurdistan, a semi-autonomous region of Iraq. The Iraqi government alleged the oil was smuggled from Iraq, and the legal dispute went to U.S. courts.
Iraq and the Kurdistan Regional Government are still trying to resolve a dispute that for six months has kept a tanker full of Kurdish oil off Galveston and figures in the broader question of Kurdistan's right to sell oil overseas.
Iraqi and Kurdish officials struck an interim, temporary deal late last year allowing exports of oil produced in semiautonomous Kurdistan if it went through Iraq's state oil company.
But that agreement didn't cover the tanker United Kalavryta, anchored 60 miles offshore in the Gulf of Mexico since July, or other broader political and legal issues that could define Kurdistan's independence.
Those issues, which include an interpretation of Iraq's constitution, also are now at play in a lawsuit in a Houston federal court involving the United Kalavryta
U.S. District Judge Gray Miller of Houston this week denied several of Kurdistan's procedural arguments seeking to dismiss Iraq's lawsuit over the anchored oil tanker, including a bid to deny Iraq a hearing on whether the vessel's million-barrel cargo can be seized if it reaches U.S. waters.
The judge denied Kurdistan's motion to dismiss one mechanism for seizing property under state law, but granted a motion to deny Iraq the same mechanism under maritime law. Effectively, Iraq could call for a hearing on the matter if the tanker crossed into U.S. waters.
The suit, filed in July, alleges Kurdistan illegally transported oil drilled from Kurdish fields through a pipeline that ran from Iraq to Turkey. The oil, the suit says, was loaded aboard the United Kalavryta for transport to an unidentified buyer in the United States.
The tanker last reported its position in the Gulf of Mexico on Wednesday afternoon, according to the ship tracking site Vesselfinder.com.
The oil on the United Kalavryta would have fetched more than $100 million last summer. Now the cargo is worth less than half as much because of the collapse in oil prices since July.
Jim Loftis, a partner at Vinson & Elkins in Houston who represents the Iraqi government in the Houston lawsuit, said in an interview Thursday that the parties "are still working on the broader settlement of the political and legal issues that remain."
Miller on Wednesday ordered lawyers for Iraq's Ministry of Oil and the Kurdistan Regional Government to provide the court an update on the status of settlement negotiations in 10 days.
The lawsuit and Kurdistan's motions to dismiss it, Miller said, seek an interpretation of the Iraqi constitution. Kurdistan has said the U.S. court shouldn't take sides "in a political and constitutional impasse over Iraq's most critical resource."
But under the law, a court can't shirk its responsibility to decide a case because it may have significant political overtones, "no matter how desirable it may be to avoid deciding a case like this one," Miller said, rebutting one of Kurdistan's arguments to dismiss the case.
If the case goes forward without a settlement, the remaining issues will be decided by interpretation of Iraqi law, said Phillip Dye, another Vinson & Elkins partner representing Iraq.
The lawsuit has evolved from a commercial dispute over whether Kurdistan could sell the oil outside of Iraqi channels to much broader questions of Kurdistan's sovereignty - and that's probably while the Houston lawsuit has drawn out, said Michael Wray, a partner at Legge, Farrow, Kimmitt, McGrath & Brown in Houston who has followed the case but isn't involved.
"Maybe they can air those issues out in U.S. court," Wray said. "That's probably why the judge wants it to settle. I was surprised they were still at it."
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A photo taken from a U.S. Coast Guard HC-144 Ocean Sentry airplane shows the tanker United Kalavryta underway in the Gulf of Mexico on July 25, 2014, before it anchored off Galveston with a load of oil from Kurdistan, a semi-autonomous region of Iraq. The Iraqi government alleged the oil was smuggled from Iraq, and the legal dispute went to U.S. courts.
Iraq and the Kurdistan Regional Government are still trying to resolve a dispute that for six months has kept a tanker full of Kurdish oil off Galveston and figures in the broader question of Kurdistan's right to sell oil overseas.
Iraqi and Kurdish officials struck an interim, temporary deal late last year allowing exports of oil produced in semiautonomous Kurdistan if it went through Iraq's state oil company.
But that agreement didn't cover the tanker United Kalavryta, anchored 60 miles offshore in the Gulf of Mexico since July, or other broader political and legal issues that could define Kurdistan's independence.
Those issues, which include an interpretation of Iraq's constitution, also are now at play in a lawsuit in a Houston federal court involving the United Kalavryta
U.S. District Judge Gray Miller of Houston this week denied several of Kurdistan's procedural arguments seeking to dismiss Iraq's lawsuit over the anchored oil tanker, including a bid to deny Iraq a hearing on whether the vessel's million-barrel cargo can be seized if it reaches U.S. waters.
The judge denied Kurdistan's motion to dismiss one mechanism for seizing property under state law, but granted a motion to deny Iraq the same mechanism under maritime law. Effectively, Iraq could call for a hearing on the matter if the tanker crossed into U.S. waters.
The suit, filed in July, alleges Kurdistan illegally transported oil drilled from Kurdish fields through a pipeline that ran from Iraq to Turkey. The oil, the suit says, was loaded aboard the United Kalavryta for transport to an unidentified buyer in the United States.
The tanker last reported its position in the Gulf of Mexico on Wednesday afternoon, according to the ship tracking site Vesselfinder.com.
The oil on the United Kalavryta would have fetched more than $100 million last summer. Now the cargo is worth less than half as much because of the collapse in oil prices since July.
Jim Loftis, a partner at Vinson & Elkins in Houston who represents the Iraqi government in the Houston lawsuit, said in an interview Thursday that the parties "are still working on the broader settlement of the political and legal issues that remain."
Miller on Wednesday ordered lawyers for Iraq's Ministry of Oil and the Kurdistan Regional Government to provide the court an update on the status of settlement negotiations in 10 days.
The lawsuit and Kurdistan's motions to dismiss it, Miller said, seek an interpretation of the Iraqi constitution. Kurdistan has said the U.S. court shouldn't take sides "in a political and constitutional impasse over Iraq's most critical resource."
But under the law, a court can't shirk its responsibility to decide a case because it may have significant political overtones, "no matter how desirable it may be to avoid deciding a case like this one," Miller said, rebutting one of Kurdistan's arguments to dismiss the case.
If the case goes forward without a settlement, the remaining issues will be decided by interpretation of Iraqi law, said Phillip Dye, another Vinson & Elkins partner representing Iraq.
The lawsuit has evolved from a commercial dispute over whether Kurdistan could sell the oil outside of Iraqi channels to much broader questions of Kurdistan's sovereignty - and that's probably while the Houston lawsuit has drawn out, said Michael Wray, a partner at Legge, Farrow, Kimmitt, McGrath & Brown in Houston who has followed the case but isn't involved.
"Maybe they can air those issues out in U.S. court," Wray said. "That's probably why the judge wants it to settle. I was surprised they were still at it."
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