Iraq turns to Syria, Jordan and Turkey to revive oil exports

• Hormuz blockage forces rethink
• Truck delivery to Jordan and Syria
• Pipeline link to Turkey’s Ceyhan port

Iraq is looking at a range of options to circumvent the Iranian blockage of the Strait of Hormuz and restore vital oil exports. 

Baghdad is investigating alternative oil export routes via Syria, Jordan and Turkey after the Iran war disrupted shipments, although these options are likely to offer only limited volumes compared with pre-war flows.

Iraq, Opec’s second largest oil producer with proven reserves of 145 billion barrels, has been forced to cut production at its oilfields to around a third of normal output of more than 4 million barrels per day (bpd) after storage facilities at key fields became full and shipments through the strait were halted.

Before the outbreak of the war between the US, Israel and Iran on February 28, Iraq had been exporting nearly 3.5 million bpd through Hormuz.

On March 16, Iraqi minister for oil Hayan Abdul Ghani said his ministry had issued tenders to export crude through the Mediterranean port of Baniyas in western Syria and the southern Jordanian port of Aqaba, with shipments to be carried by truck. 

“Tankers will be used to transport the crude oil to these countries due to the unavailability of pipelines for the Iraqi-Syria or Aqaba routes,” he said. 

Iraq already exports oil to Jordan by road at discount prices under a bilateral agreement signed by the two governments several years ago.

However, it is via Turkey that Baghdad has highest hopes of an export work-around. The route relies on a pipeline from Kirkuk in northern Iraq running through the area governed by the Kurdish Regional Government (KRG) to the Turkish Mediterranean oil port of Ceyhan. The pipeline reopened on March 18 after a three-year hiatus, as reported by Turkish state-run news agency Anadolu Agency.

Pumping through the pipeline, which has a capacity of up to 250,000 bpd, had been halted due to a dispute between Kurdish authorities and the central government over the division of revenue from oil produced in the area administered by the KRG and restrictions on trade and imports to the region.

Masrour Barzani, the KRG prime minister, said the decision to allow a resumption of oil exports had been taken due to what he said were “the extraordinary circumstances facing the country and the responsibility we all share to get through this difficult chapter”.

The Kirkuk-Ceyhan route is not the only outlet to international markets through Turkey that Iraq intends to activate. 

Further reading about the Iran conflict

• UAE businesses scramble for Hormuz trade alternatives
• Fujairah’s importance grows with each day Hormuz remains closed
• Oil seeps from the strait but returning full flow is far from easy

On March 16, Abdul Ghani had announced work was being carried out to rehabilitate a pipeline linking the Kirkuk oil fields to the Iraqi-Turkish pipeline, paving the way for the resumption of direct exports from the port of Ceyhan without having to pass through the area governed by the KRG, as reported by Reuters. 

The pipeline, which has been out of operation since 2014 after attacks by the Islamic State, has the capacity to lift up to 250,000 bpd, and could be back in operation within a week, according to Abdul Ghani.

However, Baghdad has yet to strike an agreement with Ankara over using the segment of the pipeline that runs through Turkish territory or for exporting crude via Ceyhan. Nor is it clear whether the port has the capacity to store and load the take from both pipelines at present.