Sanctions and rehabilitation costs impede operation of the Kirkuk-Baniyas oil pipeline
Enab Baladi – Muhammed Fansa
After the first visit of the Iraqi Prime Minister, Mohammed Shia’ al-Sudani, to Syria, and his meeting with the head of the Syrian regime, Bashar al-Assad, official Iraqi statements were issued confirming the latter’s readiness to discuss reviving the Iraq-Baniyas oil pipeline amid Iraq’s efforts to find new outlets for export, which raises the question about the possibility of achieving such a step.
In statements reported by the Iraqi News Agency (INA) on July 17, the Iraqi government spokesman, Basem al-Awadi, said, “Iraq is looking for new outlets to export Iraqi oil.”
Al-Awadi added, “Iraq is ready to discuss with Syria the file of reviving Iraq’s oil pipeline to the Mediterranean Sea in the event that Syria’s conditions improve, which will also provide Iraq with new opportunities to export its oil and deliver it quickly to the Mediterranean Sea and the buying countries.”
The spokesman stressed that “Syria has very large and well-known ports on the Mediterranean Sea, and therefore if it is convinced to join the development road map for land and rail links from its ports to the Iraqi-Syrian-Turkish triangle, I believe that this will also provide substantial financial resources.”
On July 16, al-Assad and al-Sudani spoke during the latter’s visit to Damascus on the issues of combating terrorism, drug trade, and regional water, according to the joint press conference.
The establishment of the Iraqi-Syrian Kirkuk-Baniyas oil export pipeline dates back to 1952, with a length of 800 km. It was implemented by British Petroleum after World War II, as it had extensive oil investments in the two countries.
The pipeline was operated for intermittent periods historically, affected by the developments that took place in the region in general and the internal changes in Syria and Iraq.
Work on the pipeline continued continuously from its inception until 1980, when it stopped for a long period from the early eighties with the outbreak of the first Gulf War, to return to work in 1997, before it stopped again after the US invasion of Iraq in 2003.
Osama Sheikh Ali, assistant researcher at the Omran Center for Strategic Studies, told Enab Baladi that the first obstacle is related to cost. Although the Iraqis can bear the cost of reviving the line on the Iraqi side, the regime does not have the financial capacity to revive the pipeline.
Sheikh Ali does not expect the Russians to support the regime’s government with sums amounting to billions of dollars, to revive the pipeline and equip the port, despite their economic interest in activating it.
Government-backed private Russian oil companies have many investments in oil projects, such as drilling, developing fields, and building pipelines, such as Rusneftegaz and Rosneft, which own 60% of the main oil export pipeline in the Kurdistan region of Iraq.
The American “Caesar Syria Civilian Protection Act of 2019” prohibits any dealings with the regime’s government in the field of oil, in addition to European sanctions, according to Sheikh Ali.
Nabil Jabbar al-Tamimi, an Iraqi expert in political and economic affairs, believes that the possibility of reviving the oil pipeline depends on the current condition of the pipeline, the level of security achieved in the lands through which the pipeline passes, and the extent of the two countries’ ability to activate this oil pipeline, and the possibility of oil buyers to deal with Iraqi oil exported through Syrian ports due to the existence of sanctions.
According to Sheikh Ali, if this line is activated, the Syrian regime will become self-sufficient in oil resources, and it will also increase Russia’s ability to control the oil markets in the global markets, as it controls the Syrian ports, which is rejected by the US and European countries.
This line extends across the desert areas, where security operations and skirmishes are taking place against cells of the Islamic State group, which makes it an easy target for the IS group, according to the Syrian researcher.
Sheikh Ali expected the Iranian militias to exploit the oil pipeline if it is reoperated through their contract with the regime under the pretext of protecting the oil pipelines, which would strengthen its “roots” in the region and threaten the US forces present in northeastern Syria.
Turkish door closed
On May 4, the Iraqi Minister of Trade, Atheer al-Ghurairy, said that during a meeting he held with the Syrian Minister of Oil, Firas Kaddour, views were exchanged on launching investments in the oil and energy fields in both countries by providing facilities for Iraqi companies wishing to invest in the field of oil in Syria, which in turn will ensure the re-operation of the Kirkuk-Baniyas oil pipeline.
The Iraqi minister stated that the Syrian-Iraqi oil pipeline is of exceptional importance for Iraq, given the high cost of exporting its oil abroad at present, he explained that the likely scenarios for pumping through the Kirkuk-Baniyas pipeline focus on assigning repair operations to each party in its territory.
Al-Ghurairy pointed out that preliminary estimates for restarting the pipeline require maintenance operations at a “large” financial cost, given the “significant” damage it has been exposed to in recent years, whether in the Iraqi section or in Syria.
The Iraqi researcher, al-Tamimi, told Enab Baladi that the Iraqi government is studying a strategy to diversify and multiply the oil export outlets from Iraq and that the government intends to revive and establish several new lines, including the Basra-Haditha-Aqaba line passing to Jordan, and the Kirkuk-Baniyas pipeline passing through Syrian lands, as well as other lines through Saudi lands overlooking the Red Sea.
There are several factors that prompted Iraq to rush to think about the issue of diversifying Iraqi oil export outlets, according to al-Tamimi. The most important of which are the recent events between Iraq and the Kurdistan region of Iraq and Turkey, and the results of the decisions of the International Court of Arbitration in favor of the government of Iraq, and the Turkish reactions to stop the export lines passing from Kirkuk towards the Turkish port of Ceyhan through Turkish territory.
Turkey has stopped importing oil from the Kurdistan region of Iraq since March, after an international arbitral tribunal ruled in favor of Iraq in a dispute over a case related to the export of the region’s oil between Baghdad and Ankara, according to the Iraqi Oil Ministry.
The dispute dates back to 2014, when Baghdad filed a lawsuit against its neighbor Turkey before the arbitral tribunal, objecting to Ankara’s announcement to export the oil of the Iraqi Kurdistan region to global markets without the permission of the Iraqi government, as it exported about 450,000 barrels per day.
Russian pressure on Turkey
Since the interruption of the Kirkuk-Ceyhan oil pipeline, negotiations have been taking place between the Iraqi and Turkish governments to reactivate it.
Turkey objects to the existence of a compensatory amount that it must pay, according to the decision of the International Arbitration Court, estimated at $1 billion for re-export.
Sheikh Ali believes that Russia has been trying since last year with Iraq to revive the oil pipeline with Syria for several reasons, the most important of which is the presence of great pressure on the Syrian regime in terms of the great need for oil resources due to the presence of oil sources in northeastern Syria outside the control of the regime.
Regarding the timing of this step, Sheikh Ali believes that re-talking about this issue at this time could be a means of Russian pressure on the Turks after the emergence of signs of tension in diplomatic relations as a result of Turkey’s approval of Sweden’s accession to NATO and Russia’s announcement to stop the implementation of the Turkey-brokered Ukraine grain agreement.
Setting up an alternative pipeline to the Iraqi-Turkish pipeline, such as the Iraq-Baniyas pipeline, may constitute a threat to Turkish interests, Sheikh Ali concluded.
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