Exclusive: Swiss firm Trafigura helped Iraqi Kurds defy Baghdad to sell oil - sources

Thu Dec 4, 2014 3:29am EST
 
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By Dmitry Zhdannikov and David Sheppard

LONDON (Reuters) - Trafigura, one of the world's biggest commodities trading firms, played a pivotal role in helping Iraq's semi-autonomous Kurdish region export oil, which the Iraqi government considered illegal, three sources familiar with the trades said.

    This week Iraq and its Kurdish region reached a landmark deal designed to resolve a dispute over oil exports which had threatened to break up Iraq, after seven months during which the Kurds defied Baghdad to sell oil on their own.

    The Kurds have long argued that they are permitted to sell oil under Iraq's 2005 constitution, provided the revenue is shared with the rest of Iraq according to an agreed formula. The government in Baghdad says only the central authorities can sell oil, and threatened to sue buyers who deal with the Kurds.

    Swiss-based Trafigura's role in the trade has not been revealed until now. A Trafigura spokesman declined to comment, as did a spokesman for the Iraqi Kurdish regional government.

    According to the three sources, who revealed the commercial information on condition of anonymity, Trafigura became involved in Kurdish oil sales after the Kurds achieved poor results from initial attempts at exports early this year. Ships had been loaded but ended up sailing aimlessly, with few buyers willing to brave Baghdad's anger to take delivery.

    Since Trafigura began handling some of the sales in recent months, all of the 30-plus tankers have found buyers, apart from one for which Trafigura was not responsible, the sources said.

Trafigura struck its deal to sell Kurdish oil with the Kurdish regional government this summer after meetings in London and the Kurdish capital Arbil, the sources said. At the time, a lightning advance of Islamic State militants in northern Iraq threw the Kurds into front-line battle.

    The oil was delivered to destinations such as Israel, Croatia and to buyers off the coast of Malaysia, according to trading sources and publicly available ship-tracking data. A series of ship-to-ship transfers and temporary storage arrangements was put in place, often making it difficult to track final destinations.   Continued...

 
Trafigura logo is pictured in the company entrance in Geneva March 11, 2012.  REUTERS/Denis Balibouse