Page 4 - MEOG Week 29

MEOG Commentary MEOG
Iraq’s pipeline focus
intensifies with
regional concerns
Baghdad’s concerns about Gulf trade routes are growing amid geopolitical hostility, bringing panic about its lack of export infrastructure
Iraq
What:
Iraq’s oil production has been hamstrung by a lack of available export routes.
Why:
This has been brought into focus because of concern about the safe passage of tankers through the Strait of Hormuz.
What next:
while Iraq’s shortage of pipeline exibility has been cause for concern in the past, the lack of progress means that it is now effectively at a standing start.
ConCern in Baghdad is growing for its Gulf exports as the detention by Iran of the Brit- ish-flagged tanker Stena Impero has brought into sharp focus the safety of vessels passing through the Strait of Hormuz.
It is no surprise that Iraqi Prime Minis- ter Adel Abdul Mahdi announced earlier this month that new export routes were being con- sidered via Jordan and Syria.
Iraq’s reliance on the Gulf export route makes it vital for the country’s economy. Iraqi o cials said last week that exports via its southern ports had reached 3.42mn barrels per day so far in July, having fallen to 3.39mn bpd in June, which the o cials were quoted by reuters as saying had come about because of repairs to an o shore pipeline.
exports to the north-west are piped via the Kirkuk-Ceyhan Pipeline, which is often also referred to as the Iraq-Turkey Pipeline (ITP). This consists of two strings, which originally had an original combined nameplate capacity of 1.6mn bpd, with the wider, 46-inch (1,168-mm) pipe capable of carrying 1.1mn bpd and the nar- rower, 40-inch (1,016-mm) line 500,000 bpd.
However, following years of sabotage and dis- repair, sources in Iraq told Middle East Oil & Gas (MEOG) this week that Kirkuk-Ceyhan is rarely capable of achieving anywhere near 500,000 bpd in total.
There is also an erbil-controlled pipeline, which runs from the Taq Taq eld via Khurmala and connects to Kirkuk-Ceyhan at the metering station in the border town of Fishkhabur. is line was designed to carry 700,000 bpd, but federal Iraqi oil would need to be put under the control of the Kurdistan regional Government (KrG) to make use of the conduit.
Under evaluation
e implementation of the $5bn Basra-Aqaba pipeline has been agreed upon by Baghdad and Amman, with plans entailing a 1mn bpd line taking southern Iraqi oil to Jordan’s red Sea
coast. e project recently received endorsement from the Iraqi cabinet, including Jordan having the right to buy 150,000 bpd of oil transferred through the 1,700-km pipeline.
Speaking to Al-Monitor, Iraqi Ministry of oil (Moo) spokesperson Assem Jihad said this week that “investment o ers from international companies” were under evaluation on the basis of establishing “the pipeline in return for a per- centage that will be deducted for each exported barrel”.
An agreement to build the pipeline was origi- nally reached in 2013 but the project was delayed by the di culty of nding investors under the build-own-operate-transfer (BooT) contract model planned for the cross-border stretch. e invasion of so-called Islamic State (IS) in 2014 then made the northernmost Iraqi portion of the route too dangerous to attempt execution.
A revised route via najaf was said to have been settled upon in 2016 and the Moo invited expressions of interest (eoIs) in an ePC contract for the Basra-najaf string but the project has since stalled.
Both the Iraqi and Jordanian oil ministers have spoken of the strategic importance of the project to their two countries and bilateral relations have been strengthened by the recent implementation of a 10,000 bpd oil supply deal whereby crude is trucked into Jordan.
syrian surprise
Less far along is the Syrian route talked of by Abdul Mahdi. Jihad was quoted by Al-Monitor as saying that the ministry was considering “the extension of an Iraqi oil pipeline through Syrian territory to the Mediterranean Sea, and is in the process of studying the economic feasibility of the project and the appropriate geographical and security conditions”.
MEOG understands that the line in question would be constructed along a separate route to the redundant Kirkuk-Banias pipeline.
Kirkuk-Banias had a nameplate capacity
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w w w . N E W S B A S E . c o m Week 29 23•July•2019