Economic Outlook

Published October 18th, 2000 - 02:00 GMT

Economic ties between Iraq and Syria resumed only three years ago and commercial factors have definitely contributed to the warming relations. Since 1997, Syria has exported goods and medical supplies valued at over $150 million to Iraq within the framework of the United Nations oil-for-food agreement.  


A further potential source of commercial cooperation is the joint oil pipeline that was closed in 1982. During the past twelve months, the countries' oil ministers have discussed the option of re-opening the 800 kilometer-long trans-Arabian pipeline, which stretches from the oil fields of Kirkuk in northern Iraq to the Banias export terminal on Syria's Mediterranean coast. At the moment, however, the pipeline is in a dilapidated state and would require significant investment to once again become operational.  


In mid-December 1999, shareholders of Russia's Transneft voted to inaugurate an office in Baghdad that would upgrade the trans-Arabian pipeline. Russian firms are not alone in their pursuit of the lucrative Iraqi oil sector. A Chinese company has also ratified an oil field deal, while several European firms, including Elf Aquitaine and TotalFina of France, Italy's ENI, Spain's Repsol and Malaysia's Petronas have tentative agreements in place. These projects hold the potential to boost Iraq's present 2.4 million-barrel per day oil output by a further 2.8 million barrels. Any deal will, however, remain in limbo until U.N. economic sanctions are lifted. 


Meanwhile, Iraq is proceeding independently with plans to repair infrastructure, which should allow it to significantly increase its oil production. Two of the four quays at Khor al-Omaia oil terminal have been repaired and could resume operations soon. Located near Iraq’s main oil terminal at Mina al-Bakr, Khor al-Omaia was virtually destroyed in the 1980-88 Iran-Iraq War and damaged again in the 1991 Gulf War. When the terminal is fixed, its capacity will approach 1.2 million barrels per day and therefore, the two repaired quays should boost Iraqi oil exports by 600,000-700,000 barrels per day. Such an increase would put Iraq’s output near 3.2-3.3 million barrels per day, close to pre-Gulf War levels. 


Beyond the energy sector, an increasing number of multinational corporations believe that the Iraqi market is one that cannot be ignored, and competition to penetrate this potentially lucrative market is intensifying in spite of the U.N. embargo. This swelling interest was manifest last November, with the inauguration of the International Baghdad Fair. More than 900 foreign companies from 37 countries aggressively displayed their products in Baghdad in a bid to secure deals under the "oil-for-food" scheme.  

© 2000 Mena Report (

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