The list of conditions Iraq must fulfill before it can resume exporting crude oil grows longer at every count.
Latest addition to the list comes from the beleaguered Iraqi Kurds who now control a strategic section of the key oil export pipeline to the Mediterranean Sea through Turkey.
The Kurds have made it clear to the Baghdad regime they will exact a price for allowing oil to pass through a 50 mile section of the line in northern Iraq near the Turkish border.
PIPELINE CRUCIAL
For Iraq, maintaining the integrity of the pipeline to the Mediterranean is a crucial part of its strategy for resuming crude oil exports. The line is in good working order and should be able to handle as much as 1 million b/d.
Control of a few miles of the pipeline has given the Kurds one of their few high value bargaining chips in relations with Saddam Hussein. Since the abortive uprising against Iraq after the Persian Gulf war, the Kurds have been on the defensive. They are currently subject to an embargo against deliveries of food, medical supplies, and arms through Iraq.
The price of resumed exports will be an end to Iraq's embargo at least on food, medical supplies, and other nonmilitary equipment. And given the value of the bargaining chip, it seems likely the Kurds will seek to extract other concessions from the Iraqis.
The vulnerability of Iraq's international sales plans to a breach of the Mediterranean pipeline is well demonstrated by a look at possible export alternatives. Iraq's other major export pipeline to the Red Sea through Saudi Arabia is closed. Given the antagonism between Saddam and the Saudi monarchy, it looks set to stay idle for the foreseeable future.
The only other alternative to the Turkish and Saudi pipelines is the Mina al-Bakr tanker terminal at the head of the Persian Gulf. It was badly damaged during allied air attacks that preceded the land campaign to eject the Iraqis from Kuwait.
United Nations officials have been convinced the terminal can be used as an export alternative to the Turkish pipeline. Iraq has repaired the facilities so that 400,000 b/d could be loaded. Industry sources say Iraq does not have enough storage at the terminal to allow sustained high volume use.
OUTLET THROUGH SYRIA?
An unlikely story also has been circulating that Syria might, for a price, allow Iraq to reopen the former pipeline from Iraqi oil fields to the Mediterranean through Syria.
Although this line has a nominal capacity of 1.4 million b/d, Iraq's section has been shut down for more than 10 years and has not been adequately maintained. The Syrian section carries domestically produced crude to the Mediterranean, leaving no room for Iraq.
All the talk about export outlets for Iraq's crude remains theoretical until Saddam accepts U.N. terms for resuming exports. Judging by talks with the U.N. in Vienna, Iraq is still intent on winning changes in the terms. It seems acceptance day is still some way off.
Copyright 1992 Oil & Gas Journal. All Rights Reserved.
