The project to ship Iraqi crude to the Syrian Mediterranean coast to bypass the Strait of Hormuz is still at least four years and $15 billion in investments away, sources familiar with the project told Reuters on Monday.
The pipeline plan, supported by the U.S. Administration as a way to reduce the importance of the Strait of Hormuz in global oil supply, is being reviewed and its feasibility assessed by a consortium, which includes U.S. supermajor Chevron.
The U.S. is touting the project as making Hormuz “irrelevant” within two years, but the actual pipeline construction would need at least four years to complete, the sources directly involved in the project told Reuters.
The existing oil pipeline that hasn’t been operational in more than two decades cannot be used for the new project, which will need new infrastructure, according to Reuters’ sources. This will complicate the project, raise the costs, and extend the timeline for completion.
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Still, the Hormuz crisis that cut off most of Iraq’s crude oil exports has accelerated plans by Iraq and Syria to rebuild the damaged oil pipeline to ship crude oil from the Iraqi fields in Kirkuk to Syria’s Mediterranean coast.
The completion of the renovation of the pipeline from Haditha in Iraq to the Syrian port of Baniyas would take “three years at most,” Youssef Qablawi, CEO of the state-owned Syrian Petroleum Company, said earlier this month.
Syria and Iraq have started negotiations to finalize the contract, and are also in discussions with companies that will invest in this pipeline, the executive said, as carried by Iraqi news outlet The New Region.
The project is expected to consist of two pipelines with a capacity of between 1.5 million barrels per day (bpd) and 2 million bpd, according to the executive.
The United States expects U.S. companies to play a role in the reconstruction of the Kirkuk-Baniyas oil route, according to reports. The pipeline would be crucial for Iraq’s oil exports not depending on Hormuz, Syria’s post-war economy, and reduced Iranian leverage in the Strait of Hormuz.
By Charles Kennedy for Oilprice.com
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