Page 6 - DMEA Week 05 2023

DMEA POLICY & SECURITY DMEA

Militia threatens planned

Basra-Aqaba pipeline

An Iraqi militant group with links to Iran this week made vague threats to

halt any effort to establish a pipeline route linking Basra with the Red Sea.

IRAQ VARIOUS versions of plans to build a 1,600-km were ongoing but added that the project was
conduit to carry crude oil from Iraq’s oil-rich only likely to proceed if costs were reduced sig-
Basra Governorate to the Red Sea port of Aqaba nificantly, offering a ballpark figure of “less than
have been on the drawing board since 1982, with $9bn”. Last year, Jordan’s Minister of Energy and
political, technical and commercial concerns Mineral Resources, Saleh Kharabsheh, gave a
converging to derail progress. price of $7-9bn.
However, following meetings held in A few months later, MoO spokesman Assem
mid-January in Baghdad between Jordanian Jihad said that the ministry had received two
parliamentary speaker Ahmad Al-Safadi and proposals to finance the project at a higher cost,
his Iraqi counterpart, Muhammad Halbousi, noting an upper limit of $8.5bn.
suggested that work would soon begin on the
cross-border link. Security concerns
This potential progress appears to have The restive nature of the Anbar Governorate in
angered the Harakat Hezbollah al-Nujaba Western Iraq is a particularly sizeable challenge
(HHN), which reports to Iran’s elite Quds Force, for the project. Parts of the region have slipped in
part of the Islamic Republic Revolutionary and out of control by ISIS since 2014.
Guard Corps (IRGC). Companies have previously abandoned bids
Leader of HHN’s political council Ali al-As- as security concerns in the region mount, despite
adi was quoted by local media as saying: “Jor- large amounts of government resources hav-
danians must know their battle is doomed for ing been assigned towards military campaigns
failure. [The Basrah-Aqaba oil pipeline] will against the group, and large amounts of territory
never be. Let them try and they shall witness having been retaken by the government.
what happens to them and whoever collaborates Despite government success, the Iraqi oil
with them.” ministry has nevertheless continued to alter the
The project will be divided into two parts: the route of the pipeline to prevent further investors
first phase includes installing a 56-inch (1,422- from leaving.
mm), 680-km pipeline with a capacity of 2.25mn This has added a further 200-300km to the
barrels per day (bpd) from the Rumaila oilfield project. Since these issues and a further wait due
to Najaf, built in three phases. to the Covid-19 pandemic, a senior fellow at
The second package covers the installation the Iraq Energy Institute stated that the project
of a 42-inch (1,066-mm), 973-km pipeline from would most likely be placed “on the back burner.”
Najaf to the Jordanian border and on to Aqaba
with a capacity of 1mn bpd. The latter will Mutual importance
include a spur carrying 150,000 bpd to the Jor- Iraq and Jordan have both stated that the project
dan Petroleum Refinery Co. (JoPetrol) at Zarqa is of vital strategic importance. It offers Iraq an
and covering its full capacity. alternative to over-reliance on its Gulf oil termi-
With concerns having previously been raised nals while also opening a quicker route to mar-
about the potential for the pipeline’s costs to spi- kets in Europe and the US, and also bypassing
ral, Halbousi stressed that “the financial cost of the Strait of Hormuz.
the Basra-Aqaba pipeline has been reduced”. However, at a time of low oil prices resulting
Estimates for its construction have come in in low economic growth and a long conflict with
as high as $26bn, based on a $4bn fee to develop militants, the Iraqi government is potentially set
the Iraqi portion of the line, with the section in to suffer revenue shortages, which may hamper
Jordanian territory costing up to $22bn. A price the outlook for the pipeline plan.
of $12bn has also been quoted for implementing Meanwhile, for Jordan, which is reliant on
the project, while in 2019, $18bn was talked of as imports for around 97% of domestic demand,
the sum for constructing an extended version of the project would provide a hard-wired supply
the line running to Egypt. stream, fed directly into its sole refinery, while
In November 2021, the Ministry of Oil pipeline tariffs would provide a steady revenue
(MoO) said that technical and commercial talks for the state.™

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