Iraq proposed reviving two oil pipelines with Saudi Arabia and Syria and encouraging the start of work on a proposed pipeline with Jordan, with the aim of diversifying its oil export outlets after freezing work on the oil pipeline extending to Turkey. However, this proposition faces many economic, political and security challenges. However, at the same time, this shed light on some dimensions related to the orientations of some Middle Eastern countries regarding energy trade in the future, including the growing interest in energy export outlets to keep pace with plans to increase its production in the future, and the need to create win-win partnerships for all parties to benefit from oil export, with the possibility of increasing orientation to the markets of other countries. south to supply them with oil.

In a press statement on the sidelines of the “Qatar Economic Forum” held on May 23/25, 2023, the Iraqi Prime Minister’s advisor for foreign relations, Farhad Aladdin, confirmed that Baghdad is seeking to revive oil pipelines with 3 Arab countries, explaining that there are Negotiations to revive the pipeline with Saudi Arabia, which existed in the seventies of the last century, and there is thinking about activating an oil pipeline through Syria, in addition to the “Basra-Aqaba” pipeline, which is currently under study by consultants.

Constant Hurdles

The Iraqi proposal to revive pipelines with neighboring countries, whether those already existed or those intended to be established, has many advantages related to promoting common interests with neighboring countries, and even strengthening them with importing countries in the event of permanent supplies of oil, but that it faces a number of challenges, the most important of which are the following:

1. The enormity of the financial resources allocated to pipeline projects: Financing some of these projects requires a huge budget, on top of which is the “Basra-Aqaba” line (see Map No. 1), whose construction cost exceeds $8 billion (according to the general manager of the Iraqi Oil Projects Company, Shaker). Mahmoud” in April 2022), and although the designs for the project have existed since 2015, it was only highlighted at the Iraqi/Jordanian/Egyptian tripartite summit meeting held in June 2021, and even after that the project did not gain momentum, which is what It is evidenced by the postponement of the previous government of “Mustafa Al-Kadhimi” in April 2022, which he put forward for the next government.

Map 1: The Proposed Path of the Oil Pipeline from Basra to Aqaba (Source: Iraqi Oil Ministry)

As for the Iraqi Syrian oil pipeline “Kirkuk-Baniyas” (see map 2), it has been closed several times, as a result of the US war on Iraq in 2003. This led to the inoperability of the pipeline as a result of damage by air strikes, leading to the destruction of parts of the pipeline. According to some estimates, the repair bill of the pipeline requires 4 billion dollars, this has prompted Syria to indicate that the repair operations would be undertaken by Iraq. In return, Syria will undertake to repair the damage to the pipeline in its territory (according to Iraqi Trade Minister Atheer Al-Ghurairy in May 2023).

Map 2: The Oil Pipeline Path between Kirkouk and Banyas

(Source: The Website of the Syrian State Television)

As for the Iraqi-Saudi IPSA oil pipeline (see Map 3), which connects Iraqi fields to the Saudi “east-west” pipeline to reach the Red Sea, the Kingdom’s approval may be in conflict with its interests, both in terms avoiding Iraqi competition and the need maximize the exploitation of the “East-West” line in the future (it can carry over 5 million barrels per day, with a possibility of increasing the capacity to 7 million barrels). Saudi Arabia tends to secure lines that divert its oil exports away from the Strait Hormuz, given that the export capacity of Yanbu port is 3 million barrels. This requires a large storage capacity to accommodate both Saudi and Iraqi oil.

Map 3: The Path of th Iraqi – Saudi Oil Pipeline

(Source: www.mees.com)

2. Possible Western pressures to prevent deals with the Syrian government: Iraq’s move to restart work on the oil pipeline with Syria faces strict US sanctions that prevent this matter from becoming a reality. The “Caesar Act” calls on the imposition of sanctions on any parties or governments that provide support or participate in large transactions and deals with The Syrian government or with any company owned by the Syrian government. There is a key emphasis on the imposition of sanctions that prevent the maintenance or the increase of Syria’s oil and gas production. There are also European sanctions prohibiting any deals with the Syrian oil sector, in addition to the fact that members of Congress submitted last May a proposal to amend the Caesar Act to become less tolerant of any Arab countries seeking to restore their relations with the Syrian regime.

On the other hand, Western countries may pressure Iraq to not restart the pipeline with Syria, given their fears that Russia will be involved in the project through its companies, further increasing Russia’s presence in the region. This is especially relevant in the energy sector as by doing so Russia would take control of oil exports from Iraq to the EU.  It must be noted that the Russian company “Rosneft” controls 60% of the “Kirkuk-Ceyhan” pipeline with Turkey (oil exports are currently frozen), which can be used in the future to put pressure on the EU.

3. Being Exposed to sabotage by armed militias: The paths of oil pipelines in Iraqi territory exposes them to sabotage operations, and the same applies to the pipeline located in Syria. As for Saudi Arabia, the possibility of linking Iraq’s pipelines with the “east-west” line may expose it to attacks similar to those carried out by the Houthi group in May 2019, which resulted in its temporary suspension of oil exports from Saudi Arabia. This pipeline is seen to increase the risk factor as a result of the current instability and would form a relatively high cost to revive the oil pipelines between Iraq and its neighboring countries.

Reasoning Behind the Oil Pipelines

The Iraqi endeavor to restart the pipelines with its neighboring countries has several reasonings that contribute to the understanding and of the nature of relations in the region based on the energy sector, the reasons are as follows:

1. The growing importance of diversifying energy exports: The conflict of interests among the countries in the region in exploiting their natural resources, especially from oil and gas, has gone beyond the traditional sense of competition from merely extracting these resources and finding markets for them to the need to find alternative and cheap ways to export them. In light of the existence of projects to increase the production of crude oil from the exporting countries in the region in the coming years (see the following table), this way the cessation of the currently limited export outlets may lead to the waste of those resources that represent a basic pillar in supporting the economies of some countries in the region.

Table 1: Production of Crude Oil amongst the Largest Produces and their Future Directions

(Source: BP Statistics and other Official Sources)

The data indicates that oil production will increase in these 5 countries by 40% over the next 4 years, prompting a need to increase the current capacity of the infrastructure, as well as to develop and diversify export outlets to reach new markets (whether oil pipelines, ports, or even shipping companies). This indicates that these outlets will increase in importance during the coming period, and may be used to achieve interests, or place pressure on countries to make their lands transit corridors for pipelines transporting oil and natural gas. This is similar to what Turkey has refused to acquiesce to with the passage of the EastMed Gas Pipeline (from Israel to Cyprus, Greece, and Italy) under the pretext that it will infringe on its territorial waters.

2. Promoting profitable partnerships for the export of oil: Accepting entry into huge cross-border pipeline projects with high investment costs is only possible between countries that are witnessing growth in their relations and stability in their strategy, so that no new government or political regime threatens work in those countries. projects, and therefore Iraq’s desire to build a new oil pipeline through Jordan and attempt to repair or even construct a new pipeline with Syria requires a solid ground for this type of cooperation, while overcoming any historical differences, and that this line should not be the only mode of cooperation between them, but not There must be other areas of cooperation in many sectors to enhance confidence in entering into giant projects. In this regard, it is noteworthy that the Iraqi / Jordanian relations are growing, as evidenced by the recent announcement of the start of electrical interconnection between the two countries, starting in July 2023, which qualifies in the future for the implementation of the “Basra-Aqaba” line in the event that the necessary financing is available.

3. Going to the markets of the countries of emerging markets to export energy: The obstacles that a country like Iraq faces in exporting its oil, whether through the risks arising from transporting oil by ships, the lack of pipelines and capacity to export to many countries. The tendency of European countries to reduce dependence on oil to achieve the goal of zero carbon emissions in 2050 may push Baghdad to try to open new markets to absorb its expected oil exports in the coming years. This may include emerging markets in the developing south such as African states. Iraqi crude oil exports in 2021 were as follows:

Fig 1

Iraqi Oil Exports Destinations in 2021 (Source: www.oec.world)

The possibility of Iraq exporting oil to African countries is due to several reasons, foremost of which is exporting to relatively close markets in the face of the challenges associated with exporting oil to European countries, and that these countries may not witness a rapid boom in the use of renewable energy similar to Western countries, due to the lack of technology, expertise, and resources. the finances needed to achieve that boom.

Joint Interests

Iraq is seeking to open more export markets in the region, the current Iraqi regime believes that entering into joint projects, such as the “development path” announced by Baghdad recently, will be the quickest way to achieve that goal.  At the same time Iraq is moving to restart oil flows through pipelines with its neighbors, and even the establishment of new lines.  However, this proposition at the current moment does not fall as a priority for neighboring countries given the risks and challenges associated with these pipelines. Therefore, Iraq will not exclude any attempts to start serious negotiations with Saudi Arabia, Jordan, and Syria, regarding these pipelines, to convince them of what it can contribute to their common interests. They will propose to maximize the benefits that these countries will gain from these pipelines (through high traffic fees, a share of the oil that will pass through the pipelines, etc).