Iraq’s Oil Ministry plans to invite engineering consortia to express their interest in January for the construction of a major new crude oil export pipeline through Jordan, before preparing a tender by April 2013.

Interested companies will be prequalified by the end of February, according to sources close to the project.

Once the tender is issued and initial bids submitted, a preferred bidders list will be drawn up, with these groups invited to enter into negotiations with the Oil Ministry for a final contract.

Financial closure for the scheme is slated for the end of 2013, with construction planned for two years from the beginning of 2014. Iraq’s first crude oil shipments through Aqaba to Asia could commence as early as 2016.

An initial commercial model was presented to potential contractors and investors at a roadshow in London on 14 December. The firms were shown details of two pipelines. The first is a 2.25-million-barrel-a-day (b/d) pipeline from the main pumping station-one (PS-1) in Basra to the pumping station at Haditha. This will be tendered and built using an engineering, procurement and construction (EPC) contract and managed by State Company for Oil Projects (SCOP), a subsidiary of the Oil Ministry.

The second covers a 750,000 b/d to 1 million b/d line from Haditha to the port of Aqaba in Jordan. Reaching financial close, however, will be tricky. The Oil Ministry is deploying a build-own-operate-transfer (BOOT) contract for the development of the Jordanian pipeline – the first in Iraq’s history and a test case for investor interest in financing such a scheme.

EPC firms and investors will establish a consortium as an operating company for the pipeline. They will be expected to then design, engineer, finance, build and operate the pipeline. Under the model BOOT contract, drawn up by Canada’s SNC Lavalin, the pipeline’s operating company will be paid a take-or-pay fee for the duration of the 20-year BOOT contract, as well as a fee for the volumes of oil transported. According to the source, Iraq’s Finance Ministry also plans to offer payment guarantees for the minimum throughput commitment agreed by the Oil Ministry and investors.