Iraq’s plans to diversify its oil export options face more delays as engineering, procurement and construction (EPC) firms await the release of a major export pipeline through Jordan.

A total of 12 international EPC consortiums have now been officially shortlisted for the estimated $7bn deal, but tenders are being held up pending approval from the Oil Ministry and the Jordanian government, sources close to the project tell MEED.

The Oil Ministry has already taken more than a year to get to this point. In December 2012, Iraq held a roadshow in London, hoping to drum up investor interest and outlining its planned timeline for a 1 million barrel-a-day (b/d) crude export pipeline through Jordan. Tenders were expected in April and financial close by the end of 2013.

The scheme covers the construction and operation of a 42-inch, 1,000-kilometre link running from 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. However, this may not be included in the final tender, according to the source.

“The ITT [invitation to tender] is done in principle,” says the source. “Inter-government and host-government agreements have been signed.

“The tender should have been released a few weeks ago, but has been delayed. We hope to see it before the end of October.”

The agreements cover a host of arrangements including crude and fuel gas supplies, and the critical transit agreement, which sets the remuneration fee paid by Iraq to Jordan for each barrel of oil passing through the pipeline.

A build, own, operate, transfer (BOOT) agreement has also been finalised. This will be the 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 agreement will be put before the Iraqi parliament for approval once the Oil Ministry enters into negotiations with its preferred bidder, but before the scheme reaches financial close.

A meeting will be held with the 12 qualified bidders to explain the bidding process shortly after the ITT issue. Assuming the tender is issued in October, bids are expected to be submitted within 6 months, taking the submission deadline to April 2014 at the earliest.

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.

Basra, in the south of Iraq, is the main point of export, but is logistically constrained to about 5 million b/d. In the north, the Iraq-Turkey pipeline is now more than 25 years old, with a design capacity of 1.6 million b/d and a current operational capacity of only 600,000 b/d.

The Oil Ministry has committed to put in place the required infrastructure by 2018 for the 17 international oil companies, to support the export of the crude produced under their licences.