(EnergyAsia, July 14 2014, Monday) — Iraq’s plans to store and trade crude oil in South Korea to serve its Asian customers have been thrown into doubt by the growing geopolitical crisis in the Middle East.
Iraq had planned to store about four million barrels of its crude oil in Yeosu terminal according to oil minister Abdul Karim al-Luaibi after signing a memorandum of understanding with his South Korean counterpart Yoon Sang-Jick in Seoul last September. The two ministers were targeting to launch the storage project in the second half of 2014.
But the plan has been derailed by the surge of violence in Iraq and Syria since the emergence of the Sunni extremist group known as the Islamic State in early June. Originally known as ISIS, the new group has taken control of large parts of oil-rich Iraq and Syria with the long-term goal of creating a global Islamic Caliphate empire.
The Iraqi government is also losing control of a significant portion of the country’s oil reserves to ethnic Kurds who are fighting to break free of Baghdad’s rule.
The loss of vital oil revenues and production have affected the Iraqi government’s ability to implement and pay for the storage deal with South Korea.