Iran, Iraq discuss building a 350,000 b/d crude export pipeline

Tehran (Platts)--2Aug2004

Iran and Iraq have revived steps to build a crude oil export pipeline that
would pump 350,000 b/d of Basra Light to Iran's Abadan oil refinery, the
Iranian foreign minister Kamal Kharazi said over the weekend. Kharazi made his
comments during the Iran-Iraq Economic Cooperation conference in Tehran from
Aug 1-2. Iraqi delegates at the conference include officials from the oil
ministry, the State Oil Marketing Organization and the State Oil Pipeline Co.
But the export pipeline agreement is still only under negotiations. "There
have only been discussions made on the pipeline, with no operations or
executive actions taken to go ahead with the project," the ex-head of Iraqi's
interim government Ahmed Chalabi said at the conference. Last year, Kharazi
had proposed taking 700,000 b/d of Iraqi crude via pipeline to be exported
through the Iranian Persian Gulf loading terminal on Kharq Island. But Iraq
still lacks the production capacity to pump additional crude to Iran, Iraq oil
officials have said. Iraqi crude output stands at about 2.2-mil b/d.

Iraq has sought additional export routes because the key crude export pipeline
from the northern Kirkuk oilfields to the Turkish Mediterranean port of Ceyhan
has been offline. Ongoing acts of sabotage have prevented regular loading of
Kirkuk crude north. Iraqi southern export levels have also fluctuated over the
last four months due to sabotage against two key pipelines running south of
Basra. But Iraq may need to secure additonal export routes as Iraq production
increases in the south. The Basra Oil Terminal and the Khor al-Amaya Terminal
have a combined capacity of about 2.1-mil b/d.

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