Hormuz crisis prompts Iraq and Jordan to revisit oil pipeline plan

Iraq and Jordan have discussed resurrecting dormant plans for an oil pipeline linking Basra and the kingdom’s only port of Aqaba, as the US encourages countries in the region to find alternative routes to the Strait of Hormuz.

Jordanian state television reported that Foreign Minister Ayman Safadi and Iraqi Prime Minister Ali Al Zaidi on Wednesday discussed “moving forward” with the Basra–Aqaba project at a meeting attended by Tom Barrack, President Donald Trump‘s special envoy to Iraq and Syria, as well as US ambassador to Turkey.

The Iran conflict and ensuing war of attrition have initiated a scramble to build alternative routes for Gulf oil and other goods to bypass the Strait of Hormuz. Proposals by Turkey, Saudi Arabia, the UAE and others have focused on redirecting traffic over land to ports in Syria, Turkey and Iraq. Iran cut off access in the strait during the war, and the US also blockaded the area, with an agreement to reopen the channel unravelling in the past few weeks.

Brent crude was trading around $84 per barrel on Thursday, up from $76, before the latest escalation involving the strait.

“The participants discussed opportunities for trilateral co-operation … in several areas of mutual economic interest,” Jordanian state television reported. The 1,600km project was approved by Iraq in July 2019 but has never been completed.

Mr Barrack, a confidant of Mr Trump and a former businessman, has been a proponent of new routes to lessen the worldwide reliance on the strait. Like other oil producers in the region, Iraqi exports have been badly affected as a result of the conflict.

There are also concerns in the Middle East over the Iraqi government’s relationship with Iran, which has also built up Shiite militia proxies in the country. These militias are seen as ideologically loyal to Tehran’s clerical ruling elite.

Iraq remains the only major oil exporter in the Levant, although exports from its main southern fields dropped 70 per cent during the Iran war. Mr Barrack has held talks with officials from Syria and Iraq, as well as Chevron, about repairing a pipeline that runs from Iraq’s Kirkuk fields to Syria’s port of Baniyas, sources in Washington said.

The pipeline scheme with Jordan dates back to 2013, when the two countries signed an agreement to build the underground system passing through Jordan’s only refinery in Zarqa, near Amman. It had a proposed initial capacity of 150,000 barrels per day and a cost of $18 billion. It was due for completion in 2017 and neither Jordanian nor Iraqi officials have explained why it remains unfinished.

In 2020, officials from Jordan, Egypt and Iraq met in Cairo and discussed expanding the unfinished pipeline to link all three countries, as diplomatic relations between them improved under Mustafa Al Kadhimi, the then-Iraqi prime minister who had started a rapprochement with Sunni Arab nations.

The latest version of the project, according to Jordan’s state television, would be a two-section pipeline. A 700km, 2.25 million bpd section is supposed to connect the Rumaila oilfield near Basra to the western city of Haditha. The second section, from Haditha to Aqaba, would carry one million bpd.