Amidst the geopolitical tensions in the region and the closure of the Strait of Hormuz, the Iraqi and Syrian governments are working to revive a strategic pipeline project to transport crude oil from the Kirkuk oil fields to the Syrian port of Banias on the Mediterranean Sea.
On Thursday, the Iraqi Ministry of Oil announced a radical shift in the project's nature, moving from a plan to rehabilitate the damaged old pipeline to a feasibility study for constructing a completely new pipeline with a capacity of up to 1.5 million barrels per day. This aims to ensure export flexibility and reduce reliance on vulnerable waterways.
Project Details: From Rehabilitation to New Construction
Iraqi Deputy Oil Minister Basim Mohammed Khudair confirmed in a press statement that the old Kirkuk-Banias pipeline has become inoperable due to decades of neglect and sabotage. He indicated that the ministry is currently conducting specialized studies for the construction of a new pipeline, known as the "Basra-Haditha Pipeline" project, which will include strategic branches extending towards Jordan and Syria, reaching Banias.
- Potential Route and Length:
The old pipeline is approximately 800-850 kilometers long. The proposed new route (Basra-Haditha) will be significantly longer, aiming to connect southern Iraq with the northwest. This will allow for the diversion of crude oil from southern fields to the north should conventional sources fail, granting Iraq unprecedented flexibility in its export operations.
Capacity and Costs
- Design Capacity:
According to preliminary studies, the new project aims to achieve a massive transportation capacity ranging from 700,000 to 1.5 million barrels per day. This contrasts sharply with the limited capacity of the old pipeline, which did not exceed 300,000 barrels per day before it ceased operations.
- Estimated Costs:
The project is estimated to require substantial investments:
• Cost of Rehabilitating the Old Pipeline: Initial estimates (before the decision to construct the new pipeline) indicated that rehabilitating the old pipeline with a capacity of 700,000 barrels per day would have cost approximately $8 billion.
• New Construction Cost: Some sources estimate the cost of completely rebuilding the pipeline network and new pumping stations at over $4.5 billion, taking into account that the pipeline will be dual-purpose (carrying two different types of oil) and will include the construction of new pumping stations.
Khodair confirmed that the project is still in the design and planning stages and will be put out to tender for specialized companies to ensure efficient implementation. The pipes are expected to be manufactured locally according to international standards.
Economic Benefits and Revenues for Syria
This project represents a vital opportunity for Syria, which is suffering from a severe energy crisis. Before 2011, Syria produced approximately 387,000 barrels per day, but production has now fallen to only about 8,000 barrels per day, with domestic consumption reaching 120,000 barrels per day.
- Financial Revenues:
Syria will receive significant financial revenues from the transit of oil through its territory. Studies indicate that annual revenues for oil transit systems in the region typically range from $1 to $2 per barrel. Accordingly, the new pipeline is expected to generate approximately $200 million in transit fees annually for Syria, assuming a capacity of 1.5 million barrels per day.
- Securing Domestic Market Needs:
Beyond revenue, the pipeline will provide a secure and cost-effective source of crude oil for the Banias and Homs refineries, reducing the heavy reliance on Russian oil imports via shadow fleets. This reliance exposes Damascus to the risks of secondary sanctions and high shipping costs.
Global Transit Fees and Project Significance
In such cross-border projects, transit fees depend on several factors, including the volume of transported volumes, partnership agreements between the countries, and pipeline maintenance costs. The global average for long-distance pipeline transit fees typically ranges from $0.50 to $5 per barrel. Given the strategic relationship between the two countries and their mutual need to secure oil flows, the expected revenue for this project falls within the mid-to-low range. Expected Completion Timeline
According to official statements and engineering sources, the project is expected to take approximately 24 to 36 months to complete, assuming immediate commencement of work and simultaneous reconstruction efforts on both the eastern and western sides. Youssef Qablawi, Director General of the Syrian Petroleum Company, indicated that the project is a top priority and that several development finance institutions, including some in Saudi Arabia, have expressed interest in funding it.
Geopolitical Context and Strategic Motivation
The accelerated implementation of the project comes amidst the ongoing conflict between the United States and Israel against Iran, which began on February 28, 2016, and effectively led to the closure of the Strait of Hormuz. This closure has severely hampered Iraqi oil exports, which rely on this waterway for 90% of their revenue. Through this pipeline, Iraq aims to open an alternative export route to Europe via the Mediterranean Sea and bolster its export capacity, which has declined by 80% from its southern oil fields.
Furthermore, the project's success will contribute to reducing Russian influence in Syria, where Russian oil currently represents a key leverage point, and will provide a more secure and stable alternative supply route.
Zaman Al Wasl
Comments About This Article
Please fill the fields below.