New pipeline deal tendered in Iraq

11 November 2013

40-inch pipeline will connect pumping stations in north and west of Iraq

State-owned North Oil Company (NOC) has issued a tender for a new pipeline connecting the Kirkuk oil field to distribution and storage facilities at Haditha, the latest pipeline construction tender in the country’s expanding oil sector.

NOC, a subsidiary of Iraq’s Oil Ministry expects to receive bids in January 2014 for the 180-kilometer, 40-inch crude oil pipeline, according to sources close to the project.

Early estimates of the value of the deal, put its cost at up to $500m .

The planned pipeline will connect the IT1-A and K-3 pumping stations. K-3, in the Al-Anbar province is the middle point of Iraq’s North and South oil companies, with facilities to store and pump crude oil.

IT1-A is the second station along the Iraq-Turkey pipeline route, located southwest of Mosul, and 181-km from the K-3 station. Two intermediate pumping stations, known as K-2 and K-2W will also be connected to the pipeline.

The aim of the project is to transfer crude oil in two directions, carrying Basra crudes from South Oil Company (SOC) from the K-3 station to IT1-A and Kirkuk crudes towards K-3.

Iraq produces a number of crude oil grades, with gravities ranging from 15 API for north heavy grades, to 34API for Kirkuk and Basra light crude oil.

The Integrated National Energy Strategy (Ines) study, which was published in June, recommends Iraq should establish a crude evacuation system which is flexible enough to segregate Iraq‘s various crude grades to optimise exports.

The study also recommends that Basra Light crude should be evacuated through both the south and the north. Basra light volumes would complement Kirkuk light grades, increasing Iraq’s export flexibility and diversifying away from the Gulf.

However, transporting Basra crude from the south to Haditha will require the rehabilitation of the existing 1.6 million barrel a day (b/d) strategic oil pipeline, built in 1975. Sections of the pipeline have become unusable due to corrosion and its operating capacity has fallen to only 150,000 b/d.

Iraq plans to build a new pipeline along the route, which will connect to the planned Iraq-Jordan export pipeline.

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