Iraq and Iran’s Oil Pipeline Politics

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Irani workers weld the pipeline during a groundbreaking ceremony to mark the inauguration of the Iran-Pakistan gas pipeline, in the city of Chahbahar in southeastern Iran 11 March 2013. (Photo: Mian Khursheed)

By: Elie Chalhoub

Published Thursday, March 14, 2013

Away from the region’s headlines and wars, plans are being methodically put in place that could redraw the strategic map of the Middle East, erasing one of the region’s key colonial-era features.

Recent moves by Iran and Iraq to press ahead with the construction of a series of new oil and gas export pipelines could be attributed to Iran’s bid to counter international sanctions. The planned pipelines could also reflect Iraq’s economic recovery or perhaps pressure from oil companies for new export routes.

There may be some truth to these explanations. But a closer look makes clear that these schemes are related.

The short-term aims are evident. They include trying to lure Jordan into the region’s “resistance” axis and reducing American influence on Iran’s eastern neighbor Pakistan.

But the long-term objective is more ambitious: to connect the Middle East by way of a web of economic ties that binds them into a regional partnership whose mainstays are Iran and Iraq.

Baghdad is making it increasingly clear where it stands in terms of its regional alignment. In recent months, it has openly supported Syrian President Bashar al-Assad’s regime in Damascus, clashed with Ankara, reached out to Cairo, and been at odds with Riyadh and Doha.

The pipeline schemes also underscore Iraq’s chosen course. The country has opted to assume a role consistent with its historical legacy and its economic and strategic clout.

Iran Lures Pakistan

The latest move in this regard was Monday’s pipeline inauguration by Iranian President Mahmoud Ahmadinejad and Pakistani President Asif Ali Zardari. The pipeline will transport Iranian natural gas to Asian markets via Pakistani territory, providing Pakistan with desperately needed energy supplies.

Negotiations between the two countries began almost a decade ago, but were frequently stalled due to opposition from the US. Washington has long sought to thwart any scheme for transporting oil and gas from or through Iran.

During that period, Iran completed its section of the pipeline from the Pars gas field in the south of the country to the Pakistani border town of Multan. It has a capacity of 750 million cubic meters per day.

Tehran has undertaken to cover a third of the $1.5 billion cost of the 780-km Pakistani section of the pipeline, with the Pakistani government funding the rest.

Wooing Jordan and Egypt

Meanwhile, Iraq and Jordan have begun work on building parallel oil and gas pipelines connecting southern Iraq to the Red Sea port of Aqaba, with the possibility of extending the link to Egypt.

The 1,690-km line, which will take two to three years to complete, is to run from Basra to Haditha west of Baghdad then into Jordanian territory and south to Aqaba. Contracts for the Jordanian portion are to be awarded to companies on a build-operate-transfer basis, with ownership reverting to the Iraqi government after 20 years.

Under the agreement, the oil pipeline will provide Jordan with 150,000 barrels of Iraqi oil per day for domestic use at preferential prices (around $20 dollars per barrel below market). Apart from putting an end to Jordan’s chronic fuel crises, the scheme is expected to benefit the country to the tune of $3 billion per year.

A planned second phase of the project envisions the building of a western spur from Haditha through Syrian territory to pump 1.25 million barrels of oil per day to the Syrian Mediterranean port of Banias.

Sustaining Syria

Meanwhile, plans are being developed for a 5,000-km link to transport Iranian gas to Iraq and Syria and on into Europe, providing Iran with an export route that bypasses the Gulf.

Iran and Iraq are due to sign an agreement on the first phase of the project on 20 March. This would enable Iran to pump 25 million cubic meters of gas a day to Iraq. Proposed extensions to the line envision it supplying Jordan and Lebanon with gas.

Iran shares the Pars field – the world’s largest gas field with an estimated 14 trillion cubic meters of gas, around 8 percent of total proven world reserves – with Qatar. The emirate recently unveiled its own plans for a pipeline to carry gas through Saudi, Jordanian, Syrian and Turkish territory to Europe.

This article is an edited translation from the Arabic Edition.

Comments

Iraq Sees Turkey-Iraq-Kurdistan Oil-Export Deal Resolved Soon -Minister

By Summer Said
Iraqi Oil Minister Abdul Kareem Luaiby said Saturday that he is optimistic Baghdad will soon come to an understanding with Turkey over a contested oil-export agreement with the autonomous Iraqi region of Kurdistan.

Kurdistan has said that it had agreed to supply Turkey with oil in a deal that challenges the Iraqi central government's authority and is considered illegal by Baghdad.

Mr. Luaiby said Turkey understands that it can't enter any oil deal without Baghdad and that both the central government and Kurdistan could come to an agreement over the subject on Wednesday.

"We are optimistic we could reach common ground on Wednesday...a solution is the best option for everyone," he said on the sidelines of an energy meeting in Doha.

The minister's comments follow a recent whirlwind tour of the region by Turkey's energy minister, Taner Yildiz, part of an effort to assuage Baghdad's concerns over the deal.

Turkey's agreements with the central government and contracts with the Kurdistan Regional Government will help Iraq, Mr. Yildiz said in Ankara after a two-day trip to Baghdad and the autonomous region's capital, Erbil.

The marathon meetings with Iraqi and Kurdish officials followed a series of deals signed between Turkey and the Kurdistan government, which drew a sharp rebuke from Baghdad. Mr. Yildiz said Ankara will continue its positive approach to help create a trilateral mechanism that resolves disputes between Erbil and Baghdad, paving the way for Kurds to export oil via Turkey.

Write to Summer Said [email protected]

http://online.wsj.com/article/BT-CO-20131221-700735.html?mod=googlenews_wsj

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