Closing Hormuz will halve Iraq's oil exports

Published February 21st, 2012 - 08:28 GMT
"Today we are trying to look for alternatives to export Iraqi oil," said Shukri, whose OPEC member country is home to the world's fourth largest oil reserves
"Today we are trying to look for alternatives to export Iraqi oil," said Shukri, whose OPEC member country is home to the world's fourth largest oil reserves

Iraq could lose more than half of its oil-exporting capability if neighbouring Iran shuts the vital Strait of Hormuz shipping lane, Iraq's planning minister said on Monday, adding no immediate alternatives would make up the shortfall.

Of the average 2.165 million barrels of oil per day that Iraq exported last year, about 1.7m bpd went through Basra export terminals to the Gulf via Hormuz. "What worries us is the closure of the Strait of Hormuz because it means Iraq will lose more than half of its oil exporting capabilities," Ali Al-Shukri told Reuters in an interview. "Today we are trying to look for alternatives to export Iraqi oil," said Shukri, whose OPEC member country is home to the world's fourth largest oil reserves.

Iran is embroiled in a long-running dispute with the West over its nuclear programme and has repeatedly threatened it could close Hormuz if sanctions succeed in preventing it from exporting crude, a move Washington says it will not tolerate. The European Union last month enraged Tehran, the world's fifth largest oil exporter, when it decided to impose a boycott on its oil from July 1.

The sanctions are a delicate issue for Baghdad, which has strong political ties with Iran and Syria, where President Bashar Al-Assad is also facing international sanctions for violence in unrest against his rule. Shukri said Iraq could rely on exporting more crude by trucks and could increase the export capacity of its northern pipeline which transfers oil from the northern oilfields to the Turkish Mediterranean port of Ceyhan to 1m bpd from a current 400,000 bpd. But, he said: "These two hasty solutions which we could depend on will not meet our exporting abilities."

The Kirkuk-Ceyhan pipeline has come under sabotage attacks many times since the 2003 US-led invasion, and frequently breaks down due to technical faults that require years to fix.

Last year, Iraqi and Jordanian officials said the two countries had agreed in principle to build a pipeline to supply Jordan with crude oil in the coming decades. Currently, Iraq transports about 15,000 bpd of crude exports in trucks to neighbour Jordan. Shukri said longer-term plans that could be considered would be to invite foreign companies to rehabilitate an oil pipeline between Iraq and Banias in Syria that has been idle for about three decades. But unrest in Syria makes it unlikely there will be any immediate interest in reviving that pipeline. Assad is under increasing pressure over his government's crackdown on protests that some countries fear could slide into civil war.


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