Iraq, Syria to restore oil pipeline that provides alternative to Hormuz
Iraq and Syria signed an agreement on Friday to rebuild an oil pipeline that will provide an alternative to the Strait of Hormuz.
Baghdad and Syria signed the agreement on US investment in Iraq at the Chamber of Commerce summit in Washington DC. Minister of Energy Chris Wright presided over the signing ceremony of Basra Oil Company CEO Bassem Abdul Karim Nasr and Syrian Oil Company CEO Youssef Qablawi.
“There is plenty of room to promote development in Iraq, increase oil production, reduce dependence on hostile neighbors, and bring freedom, prosperity and abundant energy to the Iraqi nation,” Wright said in a statement before the signing.
Iraqi Prime Minister Ali al-Zaidi is visiting the United States this week. He met with President Donald Trump at the White House on Tuesday.
According to the US, the pipeline stretches from Kirkuk in Northern Iraq to the Mediterranean coast of Syria with a capacity of 700,000 barrels per day. Energy Information Management. It was closed in 2003 because it was damaged during the US invasion of Iraq.
Iraq, OPEC’s second largest oil producer, suffered greatly from the disruption of tanker traffic in the Strait of Hormuz during the US-Iran war. Baghdad is dependent on the southern port city of Basra on the Persian Gulf for limited pipeline options to transport its oil to global markets.
Iraq’s oil production fell more than 50 percent to about 1.9 million barrels per day in June, compared to about 4.2 million barrels per day in February before the U.S. and Israel attacked Iran, according to OPEC data.
Many Gulf countries are looking to expand pipeline capacity to reduce their dependence on Hormuz. The United Arab Emirates is building a second pipeline to Fujairah Port in the Gulf of Oman, which will double its export capacity outside the strait.
According to sources familiar with the matter, Saudi Arabia is considering expanding the pipeline to the Red Sea by up to 2 million barrels per day. Reuters last week.
Analysts have warned that the pipelines could serve as a hedge against geopolitical risk in Hormuz, but would not eliminate the underlying threat Iran poses to energy infrastructure in the region.
“The waterway is not the problem,” Bob McNally, founder of Rapidan Energy, said on CNBC’s “Power Lunch” on Monday. “Iran may use weapons to attack loading facilities, pump stations, terminal stations, these terminals and storage units of these pipelines.”
