Iraq, Jordan pipelines in the works

Sunday 04/09/2016
Excess gas burns off at a pipeline in the newly opened section of the oil refinery of Zubair, south-west of Basra in southern Iraq.

Amman - Oil-desolate Jordan will again benefit from Iraqi crude and liquefied gas for power generation, with a planned double pipeline that would help the king­dom reduce a soaring energy bill that has threatened to bankrupt the country.
Jordan, which imports 97% of its energy needs, used to receive crude oil from Iraq before Islamic State (ISIS) militants took control of much of western Iraq in 2014.
Since 2011, energy costs surged in Jordan to about 15% of gross do­mestic product (GDP) after pipe­lines carrying cheap Egyptian gas, which once generated 80% of Jor­dan’s electricity, were sabotaged.
A double pipeline is in the works to export Iraqi crude oil and gas via Jordan and provide the kingdom with its oil and gas needs, estimat­ed at 120,000-150,000 barrels of oil a day.
Construction of an oil pipeline between Iraq and Jordan is expect­ed to start this year, Iraqi Ambassa­dor to Jordan Safia al-Souhail said.
“Our government fully supports this strategic multibillion-dollar project and we expect the final call on bids to be taken this year,” Sou­hail said.
“Jordan, Iraq and Egypt will be the main beneficiaries of the pro­posed $18 billion Basra-Aqaba pipe­line project, which will help Egypt and Jordan meet their growing do­mestic energy demand while boost­ing Iraq’s oil and gas exports.”
Basra is in southern Iraq. Aqaba is a port on the Jordanian shores of the Red Sea.
The project is expected to pro­vide Jordan with its energy needs and the rest of the resources would be exported to international points through Aqaba, generating an esti­mated $3 billion a year in revenues for the kingdom. Egypt will benefit by using its refineries to treat the crude oil.
The proposed pipeline is project­ed to export 1 million barrels per day (bpd) of Iraqi crude through Jordan. Nearly 150,000 bpd will go to Jordan’s Zarqa oil refinery. An­other tranche will feed Egyptian refineries and the rest will be ex­ported.
The project included another pipeline to export about 7.3 mil­lion cubic metres of Iraqi natural gas through Aqaba, feeding the growing demand for natural gas in Jordan and Egypt for power genera­tion.
Jordanians opposing a gas supply deal with Israel have long argued that this pipeline project would be a feasible alternative to dealing with Israel.
“Many opposed the gas deal with Israel, and for Jordan, this is a much better deal. At least we are work­ing towards a mutually beneficial project with our brothers, Iraq and Egypt. We have always had close ties and this will benefit all of us in the end,” economist Issam Qad­amani said.
“The money generated for transit fees from the pipeline will save the Jordanian economy and help us to rebuild our economy,” he said. “At the same time, our neighbours are also benefiting.”
A 1,680km pipeline project was initially envisioned in 2013 on a build, operate and transfer basis with the pipeline running through the western Iraqi province of An­bar. In 2014, with most of Anbar under the control of ISIS, security concerns forced the Iraqi govern­ment to delay the project.
“Some international firms that had bid for the project withdrew their offers due to security fears,” Qadamani said.
Iraqi government sources said that a safer route for the pipeline would go through Basra, Najaf, the Iraq-Saudi border and then to Aqa­ba. Crude will then be exported by oil tankers to Egyptian refineries or to other international destinations.
“The adjacent natural gas pipe­line will run from the town of Ru­maila in southern Iraq to the town of Maan in the south of Jordan. It will then be linked to the existing Arab gas pipeline to feed the Egyp­tian market,” Qadamani noted.
The first phase of the oil pipeline would export 1 million barrels a day from Basra to Aqaba. The second phase would export a further 1.25 million barrels a day to the Syrian Banias port on the Mediterranean.
“Obviously, the second phase of this project is on hold until Syria gets its security back,” Qadamani said.
The Iraqi Oil Ministry received a bid from a Jordanian-Chinese consortium to build and operate a 1 million-bpd crude oil export pipeline to Aqaba for a service fee and a throughput service charge, compensating for construction and fixed operating costs.
The main firms in the consortium are China Petroleum Pipeline (CPP) and private Jordanian company Mass Global.
Two Iraqi companies have also applied for the project and the ap­plications are undergoing scrutiny.
The consortiums are waiting for a final confirmation from Baghdad to enter into exclusive negotiations and to reach financial close in the first half of 2017.
“The pipeline would deliver a new outlet for Iraq while it fo­cuses on rejuvenating its energy sector and provide an alternative to the Iranian-controlled Strait of Hormuz after Iran last year threat­ened to block the seaborne water­way if Western powers didn’t ease their pressure over its nuclear pro­gramme,” said Qadamani.