Iraq’s Oil Ministry announced that Tehran and Baghdad have signed a memorandum of understanding (MoU) to carry out studies on the construction of a pipeline to export crude oil from the northern Iraqi fields of Kirkuk via Iran.
In a statement, the Iraqi ministry said the agreement was signed during a recent ceremony in the Iraqi capital between Iranian Oil Minister Bijan Namdar Zanganeh and his counterpart Jabar al-Luaibi, Reuters reported.
The agreement also calls for a commission to resolve disputes about joint oilfields and the possible transportation of Iraqi crude to Iran’s Abadan refinery, it added.
The two sides have also agreed to cooperate on the policies of the Organization of the Petroleum Exporting Countries (OPEC).
Under the scenario, the Iraqi government would be shipping about 150,000 barrels per day of oil through Iran from fields in Kirkuk, the report added.
The public relations department of the Iranian Ministry of Petroleum announced on Tuesday that the country has made no agreements with the Iraqi Kurdistan for construction of two pipelines to deliver its crude oil to Iran.
The statement said:
“Any decision in this regard will be made during the upcoming visit of Iranian Minister of Petroleum Bijan Zangeneh to Iraq and the outcome of his talks with Iraqi officials.”
By Bijan Khajehpour, for Al-Monitor. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iran Business News.
For the past two decades, energy interconnectivity has been one of the pillars of Iran’s regional relations. From the early days of the so-called oil swap deals between Iran and Central Asia in the 1990s through the expansion of a regionally structured grid of gas pipelines, and to a growing connectivity of electricity grids, Iran has gradually become the region’s main energy hub.
In this process, Iran is not just focusing on expanding its own export potential, but on the notion of regional energy interdependency. In fact, the latest initiative — a planned crude pipeline from Iraqi Kurdistan to Iran — highlights the country’s indispensable role as an energy hub in the entire region.
Indeed, Iran and the Kurdistan Regional Government (KRG) have reportedly agreed on the technical details of a plan to build a pipeline with a capacity of up to 250,000 barrels per day (bpd) of crude oil to Iran. Reports highlight that the pipeline would connect Koysinjaq in the KRG, crossing the border at Parvez Khan and then go to Kermanshah in western Iran, where the crude would be inserted into the Iranian pipeline system and potentially used in the country’s northern refineries.
The idea of a pipeline connecting the KRG with one of Iran’s western refineries had been initiated in 2014 following major disagreements between the KRG and the Baghdad government regarding the flow of payments from Baghdad for oil exports through the existing pipeline going to the Turkish port of Ceyhan. Tensions between Baghdad and Ankara over Turkey’s position toward the so-called Islamic State as well as the deepening Syrian crisis were additional parameters in the Kurdish calculation to develop an alternative oil export route.
Iran and the Kurdistan Regional Government (KRG) have reportedly agreed the technical details of a plan to build a pipeline that could transfer as much as 250,000 bpd of Kurdish oil to Iran.
Taha Zangana (pictured), the KRG’s deputy minister of natural resources, told Al Jazeera:
“We [the KRG and Iran] have an understanding on how to do this [exporting KRG oil and gas to Iran]. The technical aspects have been talked about and are clear to both sides. What remains is the political and commercial side of it.”
Zangana added that a high-level Kurdish delegation is expected to visit Tehran after Ramadan to finalise and sign the deal, which could also include natural gas.
Iraqi Oil Minister Adel Abdel Mahdi [Adil Abd Al-Mahdi] visited Egypt and headed a delegation to attend the Tripartite Meeting of the oil Ministers of Iraq, Egypt and Jordan to complete the discussions about the oil and gas transportation pipeline.
He signed a memorandum of understanding with the Egyptian minister of petroleum and minerals, Farooq Al-Mullah, regarding cooperation with Egypt in the crude oil, gas, drilling, refining, pipeline extension, infrastructure and training.
At the same time he signed meeting minutes with Al-Mullah and the Jordanian minister of Minerals, Ibrahim Saif, to extend the oil pipeline from Basra to Aqaba.
The China Petroleum Pipeline (CPP) and private company Mass Global have reportedly formed a consortium to build an $18-billion export pipeline from Basra to the Jordanian Red-Sea port of Aqaba (pictured).
Iraqi Oil Minister Adel Abdel Mahdi [Adil Abd Al-Mahdi] told Reuters:
“The two companies will submit their investment offer to the oil ministry in March.”
According to the report, the plan is to export 1 million barrels per dy of Iraqi crude to Jordan, 150,000 bpd of which will supply Jordan’s Zarqa oil refinery.
The pipeline runs through Anbar province, most of which is controlled by the Islamic State group (IS, ISIL, ISIS, Daesh).
This article was originally published by Niqash. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.
A Pipeline In The Pipeline: Can Exporting Natural Gas Save Iraqi Kurdistan?
Beginning 2016 Iraqi Kurdistan will begin to build a new natural gas pipeline to Turkey. But analysts say if they use the same policies they do for oil, the pipeline will make things worse, not better.
Thanks to recent geo-political conflicts, the oil pipeline between the semi-autonomous region of Iraqi Kurdistan and the region’s neighbour, Turkey, is becoming more important than ever. And this in turn has apparently made both Turkey and Iraqi Kurdistan decide to build a gas pipeline too.
Officials from the two capitals, Ankara and Erbil, have been discussing building such a pipeline to bring gas from Iraqi Kurdistan to Turkey, and then from there, onto Europe, for some time.
Turkey is increasingly concerned that the Russians will stop supplying them with gas, given the latest conflicts between them after Turkey shot down a Russian fighter jet in a disputed area. And Iraqi Kurdistan continues to labour under Iraq’s financial crisis; the region desperately needs new sources of income.
The Iraqi Kurdish Ministry of Natural Resources note that their region contains around 3 percent of the world’s reserves of natural gas. If the Kirkuk region, currently under the control of Iraqi Kurdish military thanks to the security crisis, is eventually annexed to the Iraqi Kurdish region too, then that number jumps to 6 percent. Given this huge amount of natural gas and the current political and economic crises, a gas pipeline looks like an increasingly useful and lucrative project for both parties.