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Iraq-Egypt Oil Pipeline Through Jordan: Breath of Fresh Air for Iraqi Economy

© AFP 2023 / Stan HONDA/PoolA general view shows Iraq's largest oil refinery in the northern town of Baiji. (File)
A general view shows Iraq's largest oil refinery in the northern town of Baiji. (File) - Sputnik International
This week, Iraq, Jordan and Egypt signed an agreement that would expand a pipeline to transport Iraqi oil from Basra to Egypt, through Jordan. Sputnik talked to experts to find out what the benefits are for the three participants in the project.

Benefits for Iraq

In terms of benefits, the first and clearest is that Iraq will be paid for its exports. The country, struggling to restore its economy after a war with Daesh terrorists, needs serious international projects. Oil sales are one of the most affordable ways for Baghdad to solve a number of economic issues.

Iraqi economic expert Abdel Rahman al-Mashhady believes that the project will be salvation for the Iraqi oil industry.

“This is a strategic pipeline for Iraq. Despite the ongoing oil crisis, raw materials still need to be sold: lucrative agreements on the oil pipeline to Jordan and Egypt will only help the Iraqi oil sector gain confidence, and perhaps even return to its previous capacities,” he said.

Al-Mashhady noted that new pipeline construction and operation will significantly relieve the port in Basra, as well as reduce logistical risks.

“The thing is that 95% of the oil produced is transported via the Basra port. When, due to bad weather conditions, the port failed to both receive and release ships for 15 days, the penalties for delay had to be paid by the state. This project will help avoid such situations,” al-Mashhady detailed.

Baghdad must comply with the OPEC+ deal, however, and previously agreed supply volumes will have to be reduced.

The expert explained that “it was agreed that Iraq would be supplying 7 million barrels per day by late 2020. But due to known circumstances, Iraq can produce no more than 5 million barrels per day. As the Iraqi oil minister has already said, Iraq will be able to return to the agreed supply volumes only by 2025. Therefore, new agreements on supply volumes are likely to be announced in the near future.”

Alongside the destruction wrought by two US ground invasions in the country in recent times, al-Mashhady stressed that a number of projects have been frozen because of ongoing terror actions, various crises and internal problems in Iraq. A new oil pipeline with Jordan and Egypt willclearly benefit Iraq.

Economic and Strategic Benefits

Egyptian oil expert Ramadan Abu al-Elaa said that joint pipeline construction has a whole range of advantages, including those that depend on regional policy.

“The pipeline will go from Basra to the Jordanian Aqaba and then to Egypt. The main benefit is the possibility to export Iraqi oil away from the Persian Gulf tensions, as well as away from the problems with Iran. Moreover, the pipeline will help bypass the problems of oil transit through Syria, which has been a real problem for the past 10 years,” he said.

“The pipeline will allow Jordan to meet its oil needs in any quantity, which is a real help for the kingdom’s energy security,” the Egyptian expert said regarding the benefits for the Jordanian side.

According to al-Elaa, creating this section of the pipeline would not take long, as most of it is ready and only the section from Basra to the border with Jordan still needs to be built.

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