RIYADH: Iraq increased oil exports through the Strait of Hormuz and the Ceyhan pipeline in July, Oil Minister Bassem Mohammed Khudair said, as Baghdad sought to recover revenue lost during the disruption of its main export route.
Average shipments through the two outlets reached about 1.5 million barrels a day before the latest escalation in the war, Khudair said in an interview with Asharq Bloomberg in Washington broadcast Saturday.
While that remains well below Iraq’s pre-war exports, it stands at about three times Bloomberg estimates for June shipments.
Iraq is seeking a significant increase in exports to offset heavy financial losses caused by the closure of Hormuz, the main route for Baghdad’s oil sales. At the same time, the government is accelerating plans for alternative export corridors through Turkiye and Syria to protect revenue from future disruptions to the waterway.
Khudair did not provide details on the impact of renewed attacks between the US and Iran this week on export volumes, only saying that the conflict was affecting countries beyond Iraq.
Iraq’s economy is one of the region’s most exposed to the crisis, with gross domestic product potentially shrinking 15% this year, according to Standard Chartered estimates. Income from oil sales accounts for roughly 90% of government revenue.
Iraq Seeks Larger OPEC Quota
That reliance has heightened the urgency of Baghdad’s pursuit for a higher production quota within the Organization of the Petroleum Exporting Countries. But the minister reiterated that the government has no plans to leave the cartel.
“We are optimistic. OPEC members are our friends, and Iraq has a special case given what it has endured during five decades of wars,” Khudair said.
Khudair said Iraq’s OPEC membership gives the country “a secure economic umbrella” under which it can sell its oil at acceptable prices.
Alternative Routes Through Turkiye and Syria
Khudair spoke at the end of a visit to the US as part of a high-level delegation headed by Prime Minister Ali al-Zaidi. The trip saw the signing of several oil and gas deals, including an initial agreement with Syria to rehabilitate and operate a pipeline linking Iraq to the Mediterranean coast.
The agreement is intended to provide Iraq with an alternative export outlet, Khudair said.
Baghdad is in discussions with a consortium including US companies Chevron and TI Capital, as well as Qatar’s UCC Holding, over the construction and development of a pipeline network connecting southern Iraq with the north of the country and the Syrian coast.
The proposed system includes one pipeline running from Basra to Kirkuk and onward to Turkiye’s Ceyhan port. A second route would run from Haditha in western Iraq to the Syrian Mediterranean port of Baniyas.
“This will provide Iraq with economic security and the ability to export oil through these outlets,” he said.
The initial target capacity for the Syrian pipeline is estimated at about 2 million barrels a day. If completed, it could become one of the largest overland oil-export routes in the region.
Khudair said Baghdad aimed to conclude discussions with the consortium within a year, paving the way for a contract to be signed and construction to begin.
The government is seeking to shorten the timeline because of the urgent need for additional export outlets alongside Hormuz and Ceyhan, he said.
Iraq’s current export capacity through Hormuz is insufficient to support the government’s production ambitions, making the expansion of land-based pipelines necessary to increase revenue and shield the economy from disruptions to maritime routes.
Iraq is also seeking foreign investment to reduce its reliance on southern ports on the Gulf. It currently has only one main export pipeline, carrying oil from the north to Ceyhan on Turkiye’s Mediterranean coast.
Production Target Above 7 Million Barrels a Day
The government aims to raise oil production to more than 7 million barrels a day, a target that Khudair said would require time and substantial investment.
Iraq’s strategy is not limited to increasing crude exports. Baghdad also wants to expand refining capacity and convert more of its oil into petroleum products, ultimately becoming a net exporter of refined fuels that generate greater value than crude sales.
The visit to Washington yielded agreements and initial deals with US companies across several sectors valued at a total of almost $60 billion.
Energy agreements focused on expanding production, attracting major US companies to Iraqi fields and opening alternative export routes that would reduce dependence on the Gulf and the Strait of Hormuz.
Among the most significant developments was ConocoPhillips’ announcement that it would acquire a 42% stake in a BP-operated project to redevelop the Kirkuk field complex.
The complex holds more than 3 billion barrels of oil equivalent in reserves and currently produces about 328,000 barrels a day. The companies will receive financial incentives for production above that level.
Negotiations with companies including Chevron, Exxon Mobil and HKN Energy began more than a year ago and were not solely a response to the latest regional developments, the minister said.
Temporary Arrangement With Turkiye
Khudair also said Iraq was holding positive discussions with Turkiye over the operation of the Iraq-Turkiye pipeline between Kirkuk and Ceyhan.
The two sides have agreed on a temporary arrangement while they complete a new agreement governing the pipeline’s operation, he said.
A delegation from Iraq’s Oil Ministry and other government bodies visited Turkiye at the end of last month to negotiate a pipeline operating agreement and discuss mechanisms for maintaining exports through Ceyhan, Oil Ministry spokesman Salim al-Rikabi previously told Asharq Bloomberg.
Khudair described the Ceyhan route as a pillar of Iraq’s oil industry. He called for broader cooperation with Ankara that would include Turkish companies participating in the development of Iraqi fields and energy projects, rather than limiting the relationship to crude transportation.
The pipeline is a critical outlet for about 450,000 barrels a day of oil from the Kurdistan region, as well as roughly 75,000 to 100,000 barrels a day from Kirkuk.
Together, those volumes represent more than 10% of Iraq’s oil exports and provide about 80% of the Kurdistan Regional Government’s budget.
* This article originally appeared on Asharq Bloomberg
