Axeon Says it Bought KRG Crude Weeks Before Iraq Suit

Source: Reuters 8/1/2014, Location: Middle East

An asphalt maker in New Jersey became the second U.S. company to publicly confirm buying Kurdish crude oil, saying it had imported a cargo just weeks before an Iraqi lawsuit over a separate $100 million shipment offshore Texas.

In response to questions from Reuters, Axeon Specialty Products said it received the Kurdish Shaikan crude cargo in June at its Paulsboro refinery.

The company did not say whether it is the buyer of another cargo carrying Kurdish crude from Turkey on the 300,000-barrel Minerva Joy tanker now headed for New Jersey, according to Reuters sources and ship data.

Although Baghdad objects to any independent financial deals with Kurdistan's Regional Government, small shipments of oil such as the one imported by Axeon have spread all over the global market.

But even those cargoes are coming under greater scrutiny after Iraq won a U.S. court order this week to seize a one-million-barrel shipment that arrived in the Gulf of Mexico only a week ago in a dispute that has spooked buyers.

On Thursday, after a Reuters report identified it as having imported Kurdish crude, LyondellBasell confirmed it recently bought "modest quantities" of "Iraqi crudes" but that it would halt further purchases because of the dispute.

For its part, Axeon did not say if it would buy any more cargoes of Kurdish crude, but acknowledged it was "the importer of record for the June shipment," according to a company official. "We purchased this cargo on a delivered Paulsboro, New Jersey, basis from a reputable supplier."

The Minerva Joy tanker is slated to deliver on August 11 after leaving a Turkish port used to export crude trucked in by the Kurds, according to shipping data available via ThomsonReuters Eikon.

So far, Iraq has focused its crackdown mainly on large tankers departing Ceyan, Turkey, where a pipeline from Kurdistan ends. Vessels loaded at Dortyol with trucked in oil can be tougher to follow and have generally been easily sold.

Though purchases aren't banned, Washington has told U.S. companies that buying Kurdish crude can be risky.

Iraq's central government has stepped up efforts to block independent oil sales by Kurdistan's Regional Government, which sees the revenues as central to securing greater autonomy from Baghdad.

After confirming it bought two cargoes in May, Lyondell did not say if it had agreed to buy the one-million-barrel cargo currently on the tanker United Kalavrvta off the coast of Texas.

That cargo, now idle for several days, is at the center of a legal dispute between Iraq and Kurdistan over who owns it.

Despite objections from Baghdad and occasional disquiet in Washington, a number of major U.S. companies, including ExxonMobil Corp , Chevron Corp , Marathon Oil Corp and Hess Corp , are operating in Iraqi Kurdistan.

Kurdish crudes such as Shaikan, Taq Taq and Tawke are also being sold to the European market, including to Russian firm Rosneft's Ruhr Oel refineries in Germany.

Two tankers, the Nord Farer and the Angelica AN, are scheduled to deliver Kurdish crudes in August to buyers in France and Russia, according to Reuters tracking data.

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