Iraq plans Jordan oil export route

15 August 2012

Plans for exports through Syria derailed by civil war in the country

Iraq’s Oil Ministry is close to completing studies for possible crude oil exports through Jordan as an alternative to Syria as the country’s civil war continues.

Baghdad had planned to build a series of pipelines across Iraq and two export pipelines. The Oil Ministry had hoped to invite international investment into the estimated $12bn scheme with a roadshow planned in May to meet bankers, export credit agencies and oil companies.

The plan includes a 2.25 million barrel-a-day (b/d) crude oil pipeline and a 1.75 million b/d extra heavy crude pipeline that will stretch from Haditha in northwest Iraq to Syria and on to the Mediterranean.

Canada’s SNC Lavalin was appointed in May 2011 as the project management consultant. The firm has drawn up a series of build-own-operate-transfer (BOOT) contracts for the pipelines and an economic model covering capital and operating expenditure.

Approved by the Oil Ministry in April, Baghdad sought to reach an agreement with international developers before the middle of 2013, with construction scheduled for completion in 2016.

However, the scheme has now effectively been put on hold at least until the political situation in Syria is resolved, according to sources close to the ministry.

The alternative is to focus on developing an export route through Jordan, handling as much as 1 million b/d, although this is yet to be approved.

Baghdad has previously considered the route to the Mediterranean through Syria to be more attractive than Aqaba, which would add further costs as exports would still have to travel through the Suez Canal to reach Europe and North America. The exports would also be constrained by limitations on tanker size. On the other hand, the Aqaba route would be more attractive than Syria for access to the growing Asian markets.

A similar scheme through Jordan to the Red Sea port of Aqaba had been examined in the 1980s, before Iraq opted for its ill-fated Iraq-Saudi pipeline, which was closed following the Iraqi invasion of Kuwait in 1991.

Studies have already been completed for a pipeline from pumping station-1 (PS-1) in Basra to the K-3 pumping station near the city of Haditha in the west of Iraq. This will carry around 1 million b/d of crude from Iraq’s southern oil fields, which are being developed by international oil companies.

This could be tendered on an engineering, procurement and construction (EPC) basis, while the Jordan export pipeline could use the BOOT model planned for Syria, although this has not yet been decided. 

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