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Dubai, Singapore: Iraq has halted crude exports to South Korea's SK Energy in protest over an oil deal it says is illegal between Korean companies and the Kurdistan regional government, Iraqi oil ministry sources said on Monday.
Baghdad has long maintained oil deals that international companies have signed with the semi-autonomous Kurdish Regional Government (KRG) in northern Iraq are illegal.
Iraq has warned more of its crude buyers that they must back out of deals with KRG if they want to continue receiving exports, one ministry source said.
"There are others we have warned," he said, declining to give further details. "We will not deal with any company that has signed contracts with the KRG without the consent of the central government of Baghdad."
Firm deadline
Baghdad suspended a contract to export 90,000 barrels per day (bpd) to South Korea's biggest refiner SK Energy on January 1 and has given the company until January 31 to back out of the deal if it wants exports to resume, the sources said.
"If they disassociate themselves from the deal then it will be fine," one source said.
"But otherwise they are not going to receive a drop of oil."
For now, Baghdad has allocated no crude to SK for 2008, he added.
The exports account for about four-five per cent of South Korea's oil imports, a South Korean energy ministry official said.
"We have been expecting this, we are not too surprised," the official said.
SK was likely to choose developing the oilfield in the Kurdish region above resumption of oil imports, another official said.
The country was covering for the lost imports by buying crude in the spot market but the halt had caused a problem for February supplies, the official added.
An SK spokesman declined to comment.
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