US energy company Chevron has begun partnership talks to build an oil pipeline stretching to the Mediterranean via Syria, aiming to end Iraq's dependency on the Strait of Hormuz. According to a Financial Times report based on four sources, Chevron plans to implement the project together with US-based TI Capital and the group of Qatari-Syrian Al-Khayyat brothers.
The planned project includes a line from southern Iraq to Kirkuk, and a second line from there using existing infrastructure through Syria to the Mediterranean port of Baniyas. A source said an alternative route starting from Basra and splitting at Haditha to connect to Syria, Turkey or Jordan is also on the table.
Chevron also signed a memorandum of understanding with Iraq on Thursday for the development of the West Qurna 2 and Nassiriya oil fields in the south.
Meanwhile, another US energy firm ConocoPhillips announced it will acquire a 42% stake in BP Energy Company of Kirkuk Limited. The company holds the development and production contracts for the Baba and Avanah domes in Kirkuk, as well as the Bai Hassan, Jambur and Khabbaz fields. ConocoPhillips CEO Meg O'Neill said, "Kirkuk is a world-class resource base that can support Iraq's long-term energy goals and create value for both the country and BP." The deal is expected to close by the end of the year.
Seeking solutions to the economic impact of the regional war
The new pipelines and upstream investments could be a vital lifeline for Iraq's economy, which has been severely hit by the US-Israel-Iran war. The conflict that began on February 28 has led to the near-total closure of the Strait of Hormuz. Iraq used to export more than 90% of its oil through this strait; before the war, almost all southern exports were made from the Gulf terminals in Basra.
Oil accounts for about 90% of Iraqi government revenues. The export disruption is causing production declines and a drop in public revenues, putting major pressure on spending, imports and the dinar.
These deals coincided with Iraqi Prime Minister Ali Al-Zaidi's first visit to Washington since taking office in May. Zaidi met with US President Donald Trump at the White House on Tuesday; the two leaders pledged to increase Iraq's oil production and announce various energy agreements. Zaidi also met with members of the House Foreign Affairs Committee and visited Chevron's headquarters in Houston.
