Tuesday 20 March 2012

Iraqi contingency plans

Not good news



Iraq Unveils Contingency-Plan Details In Case Hormuz Shut -Spokesman

18 March, 2012

The Iraqi government Sunday revealed details of a contingency plan, including reopening a pipeline that connects to the Red Sea through Saudi Arabia, in case current political tensions with Iran lead to the closure of the strategic Strait of Hormuz, an Iraqi government spokesman said Sunday.

Eighty percent of Iraq's crude-oil exports pass through the strait.

The plan calls for restarting the Iraq-Saudi pipeline to Yanbu on the Red Sea that has been shut down since 1990, when Iraq invaded Kuwait, which, like Saudi Arabia, is a member of the Gulf Cooperation Council. Riyadh confiscated the 1.5-million-barrels-a-day pipeline and has been using it for shipping oil products for domestic consumption.

Saudi Arabia said when it confiscated the part of the line in its territory that Iraq owes it billions of dollars and can use part of that debt to cover the pipeline costs.

"The plan recommends re-operating the pipeline with Saudi Arabia if pending issues between the two countries are resolved," Ali Al Dabbagh, the Iraqi government spokesman, said in a statement emailed to Dow Jones Newswires.

The plan, which covers short- to long-term contingency measures, also proposes that Iraq should expand its oil exports routes by adding capacity from its northern export pipeline to the Mediterranean port of Ceyhan in Turkey. The pipeline currently handles some 400,000 barrels a day but that can be doubled if some repairs are carried out to the existing pipeline systems, according to Iraqi oil officials.

The aging Kirkuk-Ceyhan pipeline, however, has been the target of repeated sabotage attacks since the 2003 U.S.-led war against Iraq.

Iraq exports some 1.7 million barrels a day from its southern oil terminals, where vessels are loaded with crude oil and depart for various parts of the world via the Strait of Hormuz.
Total Iraqi oil exports stand now at 2.2 million barrels a day.

Iranian officials in January warned they could close the Strait of Hormuz, where some 40% of world's crude oil supplies pass through, if a new set of U.S. and European Union sanctions halted the Islamic republic's oil exports.

On Tuesday, the Iraqi cabinet approved the contingency plan but gave no details. The plan also calls for increasing number of trucks to ship crude oil.

"The short-term plan suggests acceleration of work to complete constructing of the strategic pipeline that pumps crude from Basra to the north linking it with the Iraq-Turkey export pipeline," Dabbagh said.

The contingency plan also calls for restart the Iraq-Syria pipeline to Banias port and the Iraq-Lebanon pipeline to Tripoli port, both on the Mediterranean Sea. The plan also proposes the construction of a new pipeline to Jordan's Aqaba port.

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