Page 4 - DMEA Week 23 2022

DMEA COMMENTARY DMEA

Jordan provides pipeline update

as Zarqa work comes into view

Despite a recent setback, Jordan says preparatory work for the
development of a new cross-border pipeline is nearing its conclusion.

MIDDLE EAST JORDAN’S Minister of Foreign Affairs Ayman Jabbar announced that various changes were
Safadi said this week that preparations for the being made to the project to ensure that it ‘meets
development of an oil export pipeline connect- the requirements and benefits of the country’.
WHAT: ing Iraq’s Basra Governorate to the Red Sea port “The Basra-Aqaba line project has not been
The Basra-Aqaba pipeline of Aqaba have reached 80%. signed, the memorandum of understanding
has been in the works Speaking during a tripartite meeting in Bagh- [MoU] has not been signed, and it has not been
for 40 years, but now dad with his Iraqi and Egyptian counterparts – referred” for implementation, he said.
appears closer to a Fuad Hussein and Sameh Shoukry – Safadi said: Abdul Jabbar noted that it had been neces-
reality than ever before. “This project has a positive impact on Iraq, Jor- sary to submit plans to the Council of Ministers
dan and also on Egypt, because the vision is to several times to fulfil procedures relating to its
WHY: complete the pipeline towards Egypt.” financial structure as well as seeking approval
Preparatory work on He added: “This is a huge project and needs a from the Ministry of Planning. Meanwhile,
the route of the pipeline lot of studies. According to our joint evaluation, changes made to the plans had necessitated an
has now reached 80%, 80% of the required preparations to launch this update of the 2020 feasibility study, with Burley
though security and project have completed, and we are now waiting Co. appointed to carry out work aimed at con-
funding obstacles are yet for the last steps.” trolling costs.
to be overcome. Talks around the Basra-Aqaba pipeline con- Cost has been a major issue for the project,
necting the oil-rich south-east of Iraq with Jor- with estimates for its construction coming in
WHAT NEXT: dan and its Red Sea Coast have been intermittent as high as $26bn based on a $4bn fee to develop
An award is anticipated since the line was first proposed in 1982, with the Iraqi portion of the line, with the section in
within the next few link running to the Zarqa oil refinery. Jordanian territory costing up to $22bn. A price
months for the upgrade The plant north of the capital Amman has of $12bn has also been quoted for implementing
of Jordan’s Zarqa refinery been intermittently supplied by trucked imports the project, while in 2019, $18bn was talked of as
that will be fed by the from Kirkuk in northern Iraq since imports the sum for constructing an extended version of
pipeline. resumed in 2019. The 2019 agreement provided the line running to Egypt.
for Jordan to purchase oil at a $16 per barrel dis- In November 2021, the Ministry of Oil
count to Brent in order to cover the transport (MoO) said that technical and commercial talks
and deviation in specifications, with Iraqi goods were ongoing, but added that the project was
exported through the port of Aqaba receiving only likely to proceed if costs were reduced sig-
preferential rates in return. nificantly, offering a ballpark figure of “less than
This deal was ‘reactivated’ in January, cover- $9bn”. In February, Kharabsheh noted that the
ing 10,000 bpd of crude supplies as well as the latest price range for the development is $7-9bn.
implementation of a 300km dual-circuit electric MoO spokesman Assem Jihad told Al-Ira-
antenna transmission line that connects Jordan’s qiya News in April that the MoO had received
Risha conversion station and Iraq’s al-Qaim two proposals to finance the project at a cost of
substation. more than $8bn. He said: “The ministry is seek-
ing to attract an offer to implement the pipeline
Progress through a company or a coalition of companies
Tangible progress on the oil pipeline appeared to that it is establishing at its expense and agreeing
be nearing when in January Jordanian Minister to deduct investment expenses over several years
of Energy and Mineral Resources Saleh Kharab- because the costs are great.”
sheh said that a framework agreement had been Jihad added: “There is also an idea that gov-
approved by the Iraqi cabinet for a 1mn barrel ernment funding will be at a cost of no more
per day (bpd) conduit running from Basra to than $8.5bn […] the project was transferred
Aqaba via Haditha in Iraq’s Anbar Governorate. to the next government because transferring it
However, in April, Iraqi authorities suggested from investment to funding requires presenting
that progress should not be anticipated until a realistic studies for implementation.”
new government is in place. While Iraq appears no closer to forming a
On April 18, Iraqi Oil Minister Ihsan Abdul new government, Safadi said this week: “The

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