Iraq is preparing to establish a project that changes the oil map. Does it affect energy producers?
Economy News – Baghdad
Iraq’s budget for the current year 2024 allocated an amount of $4.9 billion to establish a pipeline that extends from Basra in the far south of Iraq on the waters of the Gulf, to a city of Hadithi, located in the far west of Iraq within the Anbar border province with Jordan and Syria, which means the return of life to the Iraq-Jordan project, which has been witnessing political opposition inside Baghdad for years, and the export of Iraqi oil through Jordan to the world through the Mediterranean, considering that the project was mainly related to the construction of the oil pipeline through two stages, the first to Haditha, which is the longest, and the second to enter the neighboring Jordanian territory.
The project has for years witnessed controversy over economic feasibility, along with opposition from political and armed forces and parties allied to Tehran, describing the project as allowing Iraqi oil to reach the Israeli occupation, but the proposals provided by oil economists and experts confirm that opening a third export outlet for Iraq other than the waters of the Arabian Gulf and Turkey will give Iraq an advantage over Iran and Saudi Arabia in terms of export diversity, especially in times of military and political tensions in the Middle East.
Iraqi Oil Ministry adviser Ahmed Al-Omar said that the arrival of the pipe to Hadith, western Iraq, means the possibility that Iraq will transport its oil not only through Jordanian territory and then Aqaba, but also through the Syrian port of Baniyas. Al-Omar added that “the project will change the map of the oil industry and its production in the region and give Iraq a great advantage over other oil neighbors.” By approving the amount allocated for the start of the project, according to age, the government will start working on the implementation phase, stressing that Iraqi companies will work on it, and the pipe will be implemented through the Iraqi Ministry of Industry as well.
a strategic project
The Director General of the Oil Projects Company, Ali Ward Hammoud, said, “The Oil Pipeline Project in Hara is considered one of the most important strategic projects of the oil movement in Iraq, and it enhances the economy by enabling the country to export oil through new outlets.”
He added that “oil produced from the southern fields is exported through our ports and loading points overlooking the Gulf, which is the only outlet for most Iraqi oil currently, and with the presence of geopolitical challenges in the region, the Ministry of Oil has taken it upon itself to diversify the export outlets, as it has prepared during the past decade a study of the northern export system with the help of the most important international consulting companies and develop appropriate plans to develop new export outlets to serve the expansion of oil production in the country through licensing rounds offered by the Ministry.”
He continued that “a modern Basra pipe falls within this trend, and the size of the tube is 56 knots, and a card that provides the export of two million and 250 thousand barrels per day, and it will be manufactured by Iraqi hands, and the bulk of it will be made by the Iron and Steel Company of the Ministry of Industry. It provides new export outlets for Iraqi oil to the countries of Europe and North America, in line with the development road project and the government’s endeavor to make it a corridor for global energy, in addition to its role in transporting goods between East and West.”
He stressed that “there is an intention to connect the pipeline in the future to the port of Tartus on the Mediterranean, after the achievement of the appropriate security conditions in Syria, through a pipeline that is established for this purpose and connects a modern warehouse to the port of Tartus,” according to him.
Iraq towards new markets
According to Iraqi political sources, the beginning of the project was in 1983, when the Iraqi and Jordanian sides agreed to extend a pipeline from Basra to the port of Aqaba on the Red Sea, passing through Jordanian territory. At the time, the two sides demanded guarantees by the United States so that Israel should not target the pipe.
The sources state that the Sudanese government of Mohamed Shiaa is seeking to start the project as soon as possible, because the pipe represents a new type of Iraqi energy export outlet, specifically oil, and it also offers the opportunity for Iraqi oil to reach new markets in Europe, as well as economic gains and sustainable and diversified financial returns, in addition to participation and investment in international manufacturing sectors.
Although the financial budget of Iraq for this year included the new pipeline project with an estimated amount of 6.5 billion Iraqi dinars ($4.9 billion), the deputies of Basra Governorate confirmed that they would obstruct the project.
A member of the Iraqi Council of Representatives, Hadi Al-Salami, said that “the strange thing in this project is that he was rejected by most Iraqi parties during the period of Mustafa Al-Kadhimi’s (previous) government, but the parties themselves currently agree with it, and we do not know what the reasons, especially that the information is scarce about it, and we do not know the reasons for the government’s secrecrecy on it.”
Al-Salami explains that “politicians and deputies in Iraq do not have enough information about the pipe project, and we are demanding to know the economic feasibility of the project from the point of view of the government.”
The consultant in the international transport economy Ziad Al-Hashemi pointed out that “the Basra-Aqaba pipeline project is a strategic project to raise the level of cooperation between Iraq, Jordan and Egypt, and enhance the level of inter-regional relations, whether political, security and economic, and that the passage of the oil pipeline through a regional state such as Jordan, will not exploit this pipe to pressure Iraq in the future, and this ensures the smooth flows of Iraqi oil flows without hinderance.”
Al-Hashemi continues by saying that “the project raises fears of exploiting the line in the Israeli entity’s repliement of Iraqi oil in response to assumed Western requirements or pressures.”
Al-Hashemi added that “one of the problems that may face the project is the rejection by some regional pivotal countries to hinder Iraq’s attempts to diversify Iraqi oil export ports to the West, in addition to security pressures and problems in stability, which are still an obstacle to the completion and success of any Iraqi project, not to mention the possibility of opening new outlets for corruption inside and outside Iraq because of the high cost of construction.”
In turn, oil expert Kovnd Shirwani considered that “the modern Basra oil pipeline project falls within the framework of the first phase of a project that extends to the port of Aqaba in the Mediterranean, which will provide a new export outlet for Iraq.”
He continued that “we also believe that it is necessary to revive the Kirkuk-Ceyhan line, which was transporting up to 400,000 barrels per day, in addition to an investment possibility in the transport of Nineveh and Salahuddin oil and a card that could reach up to one million barrels per day, which provides important export outlets to Iraq.”
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