Iraq’s cabinet has approved the award of a $518m engineering, procurement and construction (EPC) contract for an oil pipeline with Australia’s Leighton Offshore for the final stage of its oil export terminal expansion near the southern city of Basra.

Leighton will build a 48-inch subsea pipeline to transport crude from storage facilities at the Al-Fao peninsula to a new floating terminal and install a 900,000 barrels a day (b/d) single point mooring buoy (SPM), according to government spokesman Ali al-Dabbagh, Reuters news agency reports.

Known as Japanese Sealines, the scheme is funded by a soft loan from the Japanese government. Work is expected to be completed within 16 months.

The award comes shortly after Italy’s Saipem signed a $470m deal to build an offshore oil metering platform on 14 September (MEED 22:7:11).

Iraq’s oil exports from the south of the country have been limited to just 1.8 million b/d from terminals at Basra and Khor Alamya in the Gulf. But Iraq plans to raise capacity to 4.5 million b/d. Leighton is already building three other SPMs, the first of which is due to ship its first crude oil in the new year, and should ease the export bottleneck. The two remaining SPMs are scheduled for completion by March 2012.