Page 4 - MEOG Week 16 2022

MEOG COMMENTARY MEOG

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headlines in Iraq

Iraq this week moved to quell talk of an imminent launch of work on a major new pipeline
to Jordan, though provided optimism about the resumption of exports from a southern port.

IRAQ THE Iraqi Ministry of Oil (MoO) has denied the project, while in 2019, $18bn was talked of as
that a deal is nearing on a long-planned oil the sum for constructing an extended version of
export pipeline, with proposed plans coming the line running to Egypt.
WHAT: under scrutiny from the House of Represent- In November 2021, the MoO said that tech-
Iraq has denied that atives. Talks around the Basra-Aqaba pipeline nical and commercial talks were ongoing, but
a deal is close for the connecting the oil-rich south-east of Iraq with added that the project was only likely to proceed
development of its long- Jordan and its Red Sea Coast have been inter- if costs were reduced significantly, offering a
awaited crude conduit to mittent since the line was first proposed in 1982. ballpark figure of “less than $9bn”. In February,
the Red Sea. However, tangible progress appeared to be Jordan’s Kharabsheh noted that the latest price
nearing when in January Jordan’s Minister of range for the development is $7-9bn.
WHY: Energy and Mineral Resources, Saleh Kharab- MoO spokesman Assem Jihad told Al-Iraqiya
Planning and sheh, said that a framework agreement had been News this week that the ministry had received
development of the approved by the Iraqi cabinet for a 1mn barrel two proposals to finance the project at a cost of
pipeline have now been per day (bpd) conduit running from Basra to more than $8bn. He said: “The ministry is seek-
passed from the current Aqaba via Haditha in Iraq’s Anbar Governorate. ing to attract an offer to implement the pipeline
caretaker administration Now, though, it seems the project is no clearer to through a company or a coalition of companies
to the next government. fruition – the can is being kicked down the road that it is establishing at its expense and agreeing
and progress should not be expected until a new to deduct investment expenses over several years
WHAT NEXT: government is in place. because the costs are great.”
As with its upstream, Meanwhile, the ministry provided encour- Jihad added: “There is also an idea that gov-
Iraq has an ambitious agement about the possibility of increasing ernment funding will be at a cost of no more
target for increasing oil southern exports from the Khor al-Amaya Oil than $8.5bn […] the project was transferred
export capacity, though Terminal (KAAOT), which has been largely to the next government because transferring it
feasibility concerns and shut-in since 2017. from investment to funding requires presenting
disagreements continue realistic studies for implementation.”
to hamper progress. Back up Basra-Aqaba While talks remain ongoing regarding the
On April 18, Oil Minister Ihsan Abdul Jabbar voting in of a new president and prime minis-
announced that various changes were being ter as factions supporting or opposing greater
made to the project to ensure that it ‘meets the Iranian influence clash and issues surrounding
requirements and benefits of the country’. the Kurdistan Region’s oil sector persist, Jihad
“The Basra-Aqaba line project has not been did provide some clarity on the current planned
signed, the memorandum of understanding route of the pipeline.
[MoU] has not been signed, and it has not been He said it would comprise two lines and two
referred” for implementation, he said. sections – “the first linking Basra to the Haditha
Abdul Jabbar noted that it had been neces- city in Anbar Governorate to transport crude oil
sary to submit plans to the Council of Ministers and meet the internal need from it for refineries
several times to fulfil procedures relating to its and necessary uses, as well as to increase the elec-
financial structure as well as seeking approval trical stations operating there”.
from the Ministry of Planning. Meanwhile, The second section will link Haditha to
changes made to the plans had necessitated an Aqaba, to which it will deliver an initial 200,000
update of the 2020 feasibility study, with Burley bpd of oil, working up to the 1mn bpd capacity.
Co. appointed to carry out work aimed at con- This was corroborated by Shaker Mahmoud,
trolling costs. director at the state-owned Oil Projects Co., who
Cost has been a major issue for the project said that the Cabinet had “stressed the need to
with estimates for its construction coming in study the technical cost”, noting that the maxi-
as high as $26bn based on a $4bn fee to develop mum figure of $8.5bn would be based on piping
the Iraqi portion of the line, with the section in 2mn bpd of crude to Haditha and 1mn bpd to
Jordanian territory costing up to $22bn. A price Jordan.
of $12bn has also been quoted for implementing Meanwhile, Jihad added that the conduit

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