First Cargo of Iraqi Kurdistan Pipeline Oil Sold to Europe

European markets bought the first load of oil to be carried by pipeline from Iraqi Kurdistan, the autonomous region said in a statement on Friday, adding that the revenue will be deposited in Turkey's Halkbank .

The Kurdistan Regional Government (KRG) said sales from the Turkish port of Ceyhan would continue despite opposition from the federal government in Baghdad, which has threatened legal action against any company involved in exporting Iraqi oil.

Kurdistan began pumping its own crude to the Turkish border independently of Baghdad earlier this year, bypassing the state-owned system. Previously Arbil had only used trucks to transport its oil to Turkish Mediterranean ports.

"A tanker loaded with over one million barrels of crude oil departed last night from Ceyhan towards Europe," the statement said. "This is the first of many such sales of oil exported through the newly constructed pipeline in the Kurdistan region."

It added that the oil revenue would be treated as part of the region's share of the Iraqi national budget. Baghdad has cut funds to the region as punishment for the Kurds' moves to export crude independently.

The KRG said it remained open to negotiations with Baghdad and would comply with United Nations obligations by setting aside 5 percent of the revenue in a separate account for reparation for Iraq's invasion of Kuwait in 1990.

Turkish Energy Minister Taner Yildiz said on Friday the first cargo was sold into the Mediterranean spot crude market.

"This crude oil will possibly go to Italy or Germany," Yildiz said in comments broadcast live on TRT television.

The pipeline brings a new oilstream onto global markets, one which will compete with well-established sour grades.

The Kurdish crude in tanks at Ceyhan is a mixture of two grades, Taq Taq and Tawke, market sources said, as well as a small amount of Kirkuk, which was left over in the pipeline when it was shut down at the beginning of March.

The stream is currently a medium sour grade. The oil in storage has an API gravity of around 31.3 degrees with a sulphur content of about 2.7 percent, according to laboratory reports by a local shipping agent that were seen by Reuters.

The grade is close to Iraq's Kirkuk grade, which has an API gravity of around 31-32 degrees and a sulphur content of around 2.0 percent to 2.5 percent.

Russian Urals, the most traded sour grade in the Mediterranean market, has a much lower sulphur content than the Kurdish oil but its API gravity is quite similar. Urals has a sulphur content of around 1.1 percent to 1.3 percent and an API gravity of around 30-31 degrees.

(By Isabel Coles, Additional reporting by Seda Sezer in Istanbul and Julia Payne in London, editing by William Hardy and Keiron Henderson)