(Recasts after court hearing)
By Anna Driver and Kristen Hays
HOUSTON, July 29 A high-stakes dispute over a
tanker carrying $100 million in Iraqi Kurdish crude took a
surprising turn on Tuesday when a U.S. judge said she lacked
jurisdiction given the ship's distance from the Texas shore and
urged that the case be settled in Iraq.
Federal magistrate Nancy K. Johnson said that because the
tanker was some 60 miles (100 km) offshore, and outside
territorial waters, an order she issued late on Monday for U.S.
Marshals to seize the cargo could not be enforced.
She said the dispute between Iraq's central government and
the autonomous region of Kurdistan should be resolved in Iraq.
Overnight Johnson signed an order directing the marshals to
seize the 1 million barrels of crude from the United Kalavrvta
tanker anchored in the Gulf of Mexico. Tuesday she scheduled a
conference to give the two sides a chance to state their case.
The ship could simply sail away, though it also could
offload its cargo for delivery to another U.S. Gulf of Mexico
port outside of Texas, lawyers said.
Baghdad's lawyers had laid claim to the oil in a lawsuit
filed on Monday, saying Kurdistan sold the crude without
permission from the central government.
The latest dispute over exports reflects Iraqi Kurds'
emboldened steps toward seizing greater political and economic
autonomy, with oil sales seen as central to Kurdish dreams of
independence that Baghdad opposes.
While the sides fought the legal battle in Houston, they
pressed the political fight in the courtroom of public opinion.
Iraq warned companies against trying to buy other shipments
of Kurdish crude after it won the seizure order, while Kurdish
leaders asserted their right to sell the oil but said they would
"The Ministry of Oil in Baghdad continues to interfere
directly and indirectly with KRG oil sales," said Karwan Zebari,
an official with the Kurdistan Regional Government's
representation in Washington.
A lawyer in Houston for the Kurds said the regional
government would file its own claim of ownership for the cargo,
a sign the legal standoff might continue.
Meanwhile, a Kurdish government official said export plans
would be hurt.
"We have to acknowledge that the ruling of the U.S. court
will definitely have negative consequences on the region's
attempts to market its oil," he said of the order to seize the
cargo. "Buyers now will start to step back and think twice
before purchasing Kurdish crude."
Washington has publicly opposed direct oil sales by the
autonomous region, fearing they could contribute to the break-up
of Iraq. It has stopped short of banning U.S. companies from
buying the oil while warning them of potential legal risks.
Officials from the State Department and the U.S. Marshals
Service said the judge's order could only be applied if the ship
entered U.S. territory.
In this case, that would be 12 nautical miles from shore,
said Martin Davies, a law professor and the director of Tulane
University's Maritime Law Center in New Orleans.
If the oil's owner wants to stay out of U.S. courts, "they
just have to order the ship to stay out," he said.
While the rulers of Iraq's northern Kurdish enclave have
long aspired to independence, their position has strengthened in
recent months as Kurdish Peshmerga troops have outperformed
Iraqi soldiers against Islamist militants.
Kurds have also succeeded in cementing their control of land
and oil reserves around the resource-rich city of Kirkuk, while
Iraqi Prime Minister Nuri al-Maliki, a Shi'ite Arab who has been
an adversary of Iraqi Kurds, has fallen out of favor in
At least one cargo of Kurdish crude was delivered to the
United States in May to an unidentified buyer, and four other
cargoes of Kurdish crude have been delivered this year in
The case is Ministry of Oil of the Republic of Iraq v.
Ministry of Natural Resources of Kurdistan Regional Governate of
Iraq et al, U.S. District Court, Southern District of Texas, No.
(Additional reporting by Lesley Wroughton, Missy Ryan and Tim
Gardner in Washington, Isra' al-Rubei'i and Ahmed Rasheed in
Baghdad, Terry Wade in Houston, David Ingram and Patience Haggin
in New York,; David Sheppard and Julia Payne in London and
Supriya Kurane in Bangalore; Editing by Marguerita Choy and