LyondellBasell, owner of Houston Refining LP, said Thursday that it has canceled any further purchases of "disputed" Iraqi crude oil after data published by the US Energy Information Administration on Wednesday indicated the Houston plant received two heavy Shaikan cargoes from the semi-autonomous Kurdish region of Northern Iraq in May.
"These purchases were made from a reputable international trader with a guarantee of title and in compliance with US law," LyondellBasell said in a statement. "This Iraqi crude is apparently now the subject of an ownership dispute.
"We have canceled further purchases and will not accept delivery of any of the affected crude until the matter is appropriately resolved."
According to monthly inventory data published by the EIA on Wednesday, Houston Refining LP received two cargoes of heavy sour crude from Iraq in May. The crude cargoes had a sulfur content of 4.6% and APIs of 16.7 and 21.4 degrees, according to the report.
Market sources said the crude in question, which is heavier and more sour than Iraq's Basrah, looks like heavy Shaikan crude from Kurdish northern Iraq.
Basrah, exported from Southern Iraq, typically has an API of about 30 degrees. Iraq's Kirkuk, which is produced in Northern Iraq and exported from Turkey, has an API closer to 34.
Kirkuk exports have been suspended since March, after militants sabotaged part of the pipeline system between the Kirkuk field and the Turkish border.
The Kurdish Regional Government has been exporting Shaikan crude from the country via truck to the Turkish port of Dortyol on the Mediterranean coast. According to Platts cFlow vessel-tracking software and market sources, several cargoes of Shaikan crude have moved across the Atlantic from Dortyol over the last two months, with two of them discharging in May on the US Gulf Coast.
Wednesday's data release comes as another cargo of Kurdish crude -- a Suezmax of a medium sour blend loaded from Ceyhan -- comes under legal scrutiny in the US.
The escalating spat between Erbil and Baghdad over the issue of independent exports has been heavily focused on the lifting of large, Suezmax cargoes exported via the Iraq-Turkey export pipeline and out of the Turkish port of Ceyhan.
United Kalavravta -- currently anchored offshore Galveston out of reach of Texas and US authorities -- has been the target of a lawsuit in Texas, with a district judge ordering the cargo to be seized if the oil enters US territorial waters.
LyondellBasell could not be immediately reached for comment on whether that cargo was intended for them.
The cargo is one of four tankers that have fully loaded out of Ceyhan, using oil piped to the terminal along the Iraq-Turkey export pipeline. A fifth tanker was reported to have begun loading Thursday.
Another cargo from Ceyhan, United Emblem, was taken to the East Singapore OPL, where it was partly off-loaded, likely onto another tanker, Platts cFlow data showed.
A third cargo is currently on the tanker United Leadership, which has been sitting offshore Morocco for nearly two months, while a fourth cargo was unloaded at the Israeli port of Ashkelon, reportedly into storage.
