Page 9 - MEOG Week 01

MEOG PIPeLInes & transPort MEOG
Iraq seeks bids for Jordan oil pipeline
IraQ/Jordan
IRAQ’S Ministry of Oil (MoO) has invited bids to carry out preliminary work to build a major oil pipeline to Jordan after a protracted process that has seen the multi-billion dollar conduit stall amid political and civil unrest.
The $5bn pipeline will carry an estimated 1mn barrels per day of crude from Basra in Iraq’s prolific southern region of the same name to the port of Aqaba on the Red Sea, thus providing a much sought-after route to market for Baghdad.
The move builds upon a warming of relations begun in 2018 that culminated in the resumption of oil cargoes from Iraq to Jordan last year when 10,000 bpd began being trucked across their shared border. to Jordan’s Zarqa Refinery.
The first phase will be built on the Iraqi side, stretching 700km from Rumaila to Haditha. This will have a capacity of 2.25mn bpd. This will be constructed on an engineering, procurement, construction and financing (EPCF) contract model.
The second phase will run 900km from Haditha, crossing the border and piping the
aforementioned 1mn bpd on to Aqaba and will be built on a build-own-operate-transfer (BOOT) model.
Iraqi Deputy Prime Minister for Energy and Minister of Oil Thamir al-Ghadhban said that the ministry had earlier formed a team to pre- pare legal contracts, address financial issues and oversee technical standards for implementing the project.
Ghadhban noted that the ministry had set May 2020 as the final date to receive offers for the project from the qualified companies and to select the winners before the end of 2020.
After meeting with Ghadhban in February, Jordan’s Energy Minister Hala Zawati spoke of the importance of the project, noting that an agreement would be signed between the two countries allowing for construction of the pipe- line to begin.
She also noted that the governments had agreed that the Jordan would have the right to buy 150,000 barrels of oil transferred through the pipeline.™
Chinese refiners test the waters in Kurdish crude market
KUrdIstan
CHINA’S independent refiners, who had previ- ously stayed away from the region, are buying oil from Iraq’s semi-autonomous Kurdistan region as they search for cheaper crude to improve their margins, which have reached near record lows.
Kurdish oil is typically traded under the radar as buyers fear incurring the wrath of Iraq’s State Oil Marketing Organization (SOMO), which markets grade of a similar quality. This helps push down the price of the oil, which is sent by pipeline to the Turkish port of Ceyhan before being shipped onwards.
Dongying Qirun Chemical, Dongying Haike Chemical Ruilin Chemical and at least two other Chinese refiners bought Kurdish crude for load- ing in November and December; in the first six months of 2019 Chinese buyers purchased only three cargoes, and none at all in 2018.
Asian demand for medium-grade crudes with high sulphur content – such as those
produced in Kurdistan – is growing owing to a wave of state-of-the art refineries starting up across the region.
These plants are better equipped to process lower-quality crudes into gasoline, diesel and shipping fuel than their counterparts in Europe. They are also able to produce cleaner-burn- ing ship fuel as mandated by the International Maritime Organisation’s (IMO) rules that take effect from January 1, 2010; these require marine sector emissions to be reduced; specifically, the sulphur content of fuel oil is to be cut from 3.5% to 0.5% (a reduction of 85%).
This initiative follows but also contrasts with the growth of Russian involvement in Kurdis- tan, where Rosneft was assigned five explora- tion blocks in Kurdish territory by the Kurdistan Regional Government (KRG) in 2018, and has since commissioned wells in the Garmian and Shakal blocks.™
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