Saudi outlet crucial to future exports of iraqi oil

Bob Tippee

Saudi Arabia holds immense but largely overlooked influence over the future of oil exports, now severely bottlenecked, from Iraq.

Its lever: the Iraqi Pipeline across Saudi Arabia (IPSA).

Sabotage keeps two other, vital Iraqi pipelines idle. One of them is the export line from northern fields to the Mediterranean through Turkey. The other is a reversible system linking southern and northern producing areas. An old pipeline to Syria, illicitly restarted while United Nations sanctions were in effect, is again closed.

With exports blocked, northern-field production is limited to the needs of nearby refineries plus as much as 400,000 b/d reinjected after light ends are stripped for local uses.

Isolation of the north makes exports dependent on southern production and two terminals on the Persian Gulf. Exports reached 1 million b/d this month, about half of current production capacity and less than half of Iraq's total export capability before the military invasion last March.

If logistical problems subside, the terminals together should be able to load about 1.6 million b/d. Restoration of combined design capacity of 3.8 million b/d requires major reconstruction.

Export capacity in the south must grow. Most future growth in production capacity will occur in southern fields. More immediately, if the reversible Strategic Pipeline comes back on line while the outlet through Turkey remains under siege, northern oil will flow southward and need an exit route.

Attention then will turn to IPSA.

Running from Zubair near giant Rumaila field in southern Iraq to a connection with the east-west Petroline corridor in Saudi Arabia, IPSA started up in 1985 to provide a Red Sea outlet for exports during Iraq's long war with Iran. Capacity grew in two steps to 1.65 million b/d.

Restarting IPSA would require repair of two war-damaged Iraqi pump stations. It also would require action by Saudi Arabia, which suspended operation of IPSA when Iraq invaded Kuwait in 1990 and seized ownership in June 2001.

Pipelines along the Petroline route can accommodate the Iraqi oil. Whether the same can be said for the Saudi government, given uncertainties to the north, is a difficult question.

(Author's e-mail: bobt@ogjonline.com)


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