Iraq gives go-ahead for Basra oil pipeline under deal with China

• Long-mooted project for oil exports
• Will cost $5bn, says PM Al Sudani
• Iraq seeking Hormuz alternatives

Iraq plans to award a multibillion-dollar project to build an oil pipeline to a group of Chinese companies.

The long-mooted Basra-Haditha pipeline would carry crude to Turkey, Syria and Jordan – and is now due to be constructed under the oil-for-projects agreement signed by Baghdad and Beijing in 2019. 

Chinese companies have built 1,000 schools and various oil infrastructure projects in Iraq since the accord came into force.

Mohammed Al Sudani, Iraq’s caretaker prime minister, said on Sunday the project would cost nearly $5 billion. He approved the allocation of $1.5 billion to the pipeline in 2026, to be financed within the Iraq-China deal, according to a statement from his office.

The pipeline will stretch from the southern oilfield of Basra to Haditha in the western Al Anbar governorate. From there, it will be extended to the northern border with Turkey, to the port of Baniyas in Syria and to Aqaba in Jordan.

Last month officials said Baghdad had dropped an $8 billion plan to repair a defunct pipeline that stretches from Kirkuk in northern Iraq to Baniyas. The link had transported Iraqi oil to Syria for decades before being damaged by conflict.

Iraq, Opec’s second largest oil exporter, is also pumping nearly 250,000 barrels per day of crude through the Kirkuk-Ceyhan pipeline to Turkey.

Before the US-Israeli war with Iran led to the closure of the Strait of Hormuz, Iraq was exporting nearly 3.4 million bpd by tanker through the waterway.

“Iraq had considered many pipeline projects in the past, but most of them have remained on the shelf due to funding problems, red tape and internal political problems,” said Nabil Al Marsoomi, economics professor at Al Maqam University in Basra.

“I hope this time these projects, or at least some of them, will materialise after the Hormuz closure demonstrated the seriousness of the situation.”