Oil-rich Iraq has started technical work on a planned $18 billion
oil-export pipeline from Basra in southern Iraq to the Jordanian port of
Aqaba on the Red Sea, bypassing the Strait of Hormuz, senior Iraqi oil
officials said Thursday.
If realized, the pipeline would deliver a significant export
outlet for Iraq's growing crude-oil production, which rose by 15% last
year as the country focused on rejuvenating its energy sector. It could
also provide an alternative to seaborne transport of oil through the
Strait of Hormuz after Iranian officials threatened last year that they
could block the potential chokepoint if the West didn't ease pressure on
the country over its nuclear program.
Iraq has signed some 11 post-war oil deals, three gas
agreements, and four oil and gas exploration contracts with
international energy companies.
The first phase of the 1,680-kilometer oil pipeline will
export some 1 million barrels a day from Basra, which pumps around 2.3
million barrels a day, or about 70% of Iraq's total oil production,
Basra Governor Khalid Abdul Samad Khalaf said at an Iraqi conference in
Amman.
The second phase will export a further 1.25 million barrels a
day to the Syrian Banias port in the Mediterranean, said Jamal Faleh
Hassan, head of designs section at the State Company for Oil Projects,
an affiliate of the Iraqi oil ministry.
"Our priority now is to set up the part of the pipeline which
goes to Aqaba in Jordan, while the part to Syria has been delayed
because of the [security] situation there," he said.
Pipeline developers from the U.S., Canada, Germany, Japan and China attended the Amman conference, organizers said.
The Iraqi oil ministry has already awarded Canadian consultant
SNC-Lavalin Group Inc. (SNC.T) a contract worth between $13 million and
$14 million to carry out front-end engineering designs, said Mr.
Hassan. The company is expected to finish the FEED work in the next
three months, he said.
The 680-kilometer section of the pipeline located inside
Iraq--which would extend from Basra to Haditha, northwest of Baghdad in
the western Anbar province near the Jordan border--will be financed by
the Iraqi government, said Sabah Abdul Kadhim al-Saedi, deputy head of
the contracts office at the Iraqi oil ministry.
The Iraqi and Jordanian governments will choose investors to
fund, build and operate the remaining 1,000 kilometers inside Jordan.
A gas pipeline will be built parallel to the oil pipeline to
supply gas to power stations that will be constructed along the route.
Some three pumping stations and three power stations will be built in
Iraq to operate the pipeline. In the Jordan section, there will also be
three pumping stations, Mr. Hassan said.
The project will also build storage facilities near Basra and Haditha with a total capacity of 28 million barrels, he said.
The gas-pipeline section inside Iraq will have a transport
capacity of 350 million cubic feet a day to feed power stations
operating the pipeline in Iraq.
The Jordan section will handle some 258 million cubic feet a
day. About 100 million cubic feet a day of that gas will go to Jordan
for domestic use while the remainder will be used to operate the
pipeline inside Jordan.
Out of the 1 million barrels a day of oil exports, about
150,000 barrels a day will go to Jordan for domestic use as the
Jordanian government has requested, Mr. Hassan said.
Jordan is dependent on imported oil and gas, as 96% of its
needs come from other markets. The pipeline, if built, could easily meet
all of Jordan's needs.
Last year, the Paris-based International Energy Agency
estimated that Iraq would be able to pump up to 6.1 million barrels a
day in 2020 and 8.3 million barrels a day in 2035. Iraq said it would be
able to reach 8 million to 9 million barrels a day in 2020.
The bulk of Iraqi crude oil exports are handled by the
southern oil terminals in the Gulf, where Iraq is pumping between 2.1
million and 2.2 million barrels a day while 350,000 to 400,000 barrels a
day are handled by the Iraq-Turkey pipeline to the Mediterranean port of Ceyhan.