Jul 19 2012

Iraqi plans to circumvent closure of the Strait of Hormuz

By Khayoun Saleh

Azzaman, July 19, 2012

Iraq is better positioned than other oil-rich Gulf states to quickly compensate for the loss in oil exports in case hostilities in the region lead to the closure of the Strait of Hormuz, an Iraqi oil expert said.

Haleem Kadhem, who for long has been consulting the Oil Ministry on export issues, has laid down what he says are “practical alternatives” to keep Iraqi crude flowing to the outside world even if its exports terminals at the head of the Gulf come to a standstill.

Currently, more than 75% of Iraqi oil exports of 2.2 million barrels a day pass through the Strait of Hormuz. The rest are shipped to the outside world via pipelines to Turkish terminals on the Mediterranean.

Kadhem is advising the government to seriously consider building another  pipeline to link the country’s oil fields in the southern Province of Basra to Turkish terminals on the Mediterranean.

As a first step, he said, Iraq should work to boost the current twin pipeline’s capacity linking oil fields in the northern Province of Kirkuk to Turkish terminals to nearly 1 million barrels a day.

The twin pipeline used to carry almost as much oil to the outside world when the country’s southern terminals were blocked due to the 1980-1988 war with Iran.

Priority should be given to the construction of a pipeline that will make it possible to ship Basra crude to Turkey, he said.

Another alternative route, the expert said, was the pipeline linking Basra fields, where more than 75% of Iraqi crude exports originate, to terminals on the Red Sea via Saudi Arabia.

The pipeline was functional for many years before Iraqi exports were halted due to U.N. trade sanctions imposed in 1990.

Kadhem urged the government to enter into direct negotiations with the Saudis to revive the pipeline which can handle up to 1 million barrels a day.

If these two pipelines – the one via Turkey and the one via Saudi Arabia – resume functioning close to full capacity, Iraq will be in a position to ship up to 90% of its crude destined for exports, he added.

Other options Kahdem has put before the government include rehabilitating the pipeline via Syria and also considering the construction of a new pipeline linking Iraqi oil fields to the Jordanian port of Aqaba.

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