Iraq-Jordan oil pipeline deal launched

11 November 2013

Tender issued for long awaited $7bn crude oil export project

Iraq’s State Company for Oil Projects (SCOP) has issued a long awaited tender for the construction of a major crude oil export pipeline through Jordan.

SCOP, a subsidiary of the Oil Ministry sent tender documents to the twelve shortlisted international engineering, procurement and construction (EPC) firms on 10 November, sources close to the project tell MEED.

Technical proposals are due to be submitted in March. No commercial deadline has been set, says the sources.

The scheme covers the construction and operation of a 42-inch, 1,000-kilometre pipeline connecting Haditha in the west of Iraq to Jordan’s Aqaba port. It also includes a second fuel gas pipeline, along with four pumping stations.

A branch tie-in near the Zarqa refinery in Jordan will be required, along with a 3 million-barrel tank farm and associated facilities. A 7 million-barrel tank farm will also be built near Aqaba port.

The project consultant, Canada’s SNC Lavalin, has completed commercial and technical studies up to the pre-front end engineering and design (feed), including an initial cost estimate for the scheme, which comes in at between $5bn-7bn.

SNC Lavalin also drew up the pipeline’s build, own, operate, transfer (BOOT) agreement, the first first of its kind in Iraq, coupling construction with a 20-year operational concession. It requires the contractor to finance, construct, own and operate the pipeline, in consideration for an agreed service charge. After this period, pipeline ownership will transfer to a special purpose vehicle wholly owned by the Oil Ministry.

The preferred bidder will be selected on the basis of three parameters: a service fee; a fixed operations and maintenance fee; and a variable operations and maintenance fee. The same criteria will also be used for the gas feedstock supply line.

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