°®Âþµº

The Iraqi cabinet has approved the long-awaited Basra-Haditha oil pipeline project, aiming to diversify the nation's oil export routes amidst geopolitical concerns that could disrupt the flow of oil through the Strait of Hormuz, Iraq's primary export channel.

The pipeline, estimated to cost 5.97 trillion Iraqi dinars ($4.56 billion), will span nearly 2,000 kilometres and transport up to 2.25 million barrels per day (bpd) to Jordan's Aqaba port.Ìý

The project is part of the Iraq-China Framework Agreement and is expected to strengthen Iraq's oil export capacity while providing an alternative route during potential crises in the Gulf region.

Iraq remains heavily dependent on oil exports, with 90 percent of its crude passing through the Strait of Hormuz. Any disruption in this vital waterway could have catastrophic economic consequences, making alternative routes increasingly crucial.

Meanwhile, efforts to resume oil exports from the Kurdistan Region to Turkey's Ceyhan port have remained stalled due to unresolved political and contractual disputes, costing billions in lost revenue for Baghdad, Erbil, and their international partners.

Strategic and political dimensions

While the primary objective is to bolster Iraq's oil export resilience, analysts have noted the pipeline's geopolitical implications.
"The project has more of a political dimension than an economic one," said Kamaran Qadir, a Kurdish university professor. "Transporting oil through the Gulf is cheaper than exporting it to Aqaba. However, in the event of a crisis, this pipeline could serve as a vital alternative."

Qadir dismissed speculation that Iraq's oil might be exported to Israel via the pipeline. "Israel sources oil from countries like Cyprus, Norway, or Canada and does not need Iraq's oil," he stated.

Additionally, linking the pipeline to Kirkuk oilfields could provide further strategic benefits. This would offer Iraq a northern export route, bypassing the ongoing suspension of oil shipments from the Kurdistan Region to Turkey's Ceyhan port due to political disputes and a Paris court ruling against Turkey in March 2023.

The pipeline's concept originated in the 1980s during the Iran-Iraq War, when fears over the potential closure of the Strait of Hormuz prompted Iraq to seek alternative export routes. However, political instability, wars, and economic crises repeatedly delayed its implementation.

The Basra-Haditha pipeline will be developed under the Iraq-China Framework Agreement, with construction led by state-owned entities Basra Oil Company (BOC) and the State Company for Oil Projects (SCOP).

A critical segment of the project includes a 685-kilometre, 56-inch pipeline capable of transporting 2.25 million bpd. High-quality materials will be used, and the pipeline is expected to be completed within 720 days, pending approval from the Ministry of Oil.
The project's cost has been reduced to $1.24 billion, a 5.5% discount from initial estimates, further ensuring its feasibility, as per a statement from Iraq's government.Ìý

Opposition and security concerns

The pipeline has faced criticism and threats, particularly from pro-Iran Shia militias. Last year, these groups warned of targeting the pipeline, claiming it might serve Israeli interests.

The project was revived in 2013 by former Prime Minister Nouri al-Maliki but stalled following the rise of the Islamic State group (IS) in 2014. Subsequent governments, including those led by Haidar al-Abadi, Adil Abdul Mahdi, and Mustafa al-Kadhimi, also failed to execute the project due to political pressures and security concerns.

Iraq's Coordination Framework, a political alliance dominated by pro-Iran Shia factions, poses another potential challenge. Although the current government under Prime Minister Mohammed Shia' al-Sudani has pushed the project forward, political disagreements could still derail progress.

The Basra-Haditha pipeline is hailed as a pivotal step toward securing Iraq's oil export stability. Once completed, it could safeguard Iraq's economic interests while redefining its role in the global energy market. However, the project's success depends on overcoming significant political, security, and logistical challenges that have hindered Iraq's infrastructure development for decades.