Published on 03/22/2006

Under optimal conditions, and including routes through both Syria and Saudi Arabia that are now closed or being utilized for other purposes, Iraq's oil export infrastructure could handle throughput of more than 6 million bbl/d (2.8 via the Gulf, 1.65 via Saudi Arabia, 1.6 via Turkey, and perhaps 300,000 bbl/d or so via Jordan and Syria).

Iraq’s oil exports go overwhelmingly through the southern port of Basra.

However, Iraq's export facilities (pipelines, ports, pumping stations, etc.) were seriously disrupted by the Iran-Iraq War (1980-1988), the 1990/1991 Gulf War, the most recent war in March/April 2003, and periodic looting and sabotage since then.

Currently, Iraq's export capacity is theoretically as high as 2.5 million bbl/d (around 2.0 via the Gulf and 0.3-0.5 via Turkey), but actually net exports are averaging around 1.4 million bbl/d. During the first 8 months of 2005, about 600,000 bbl/d of Iraq’s oil exports were going to North America, about 235,000 bbl/d to OECD Europe, and the rest mainly to Asia.

The 600-mile, Kirkuk-Ceyhan (Turkey) dual pipeline is Iraq's largest crude oil export line. The 40-inch line has a fully-operational capacity of 1.1 million bbl/d, but reportedly could handle only around 900,000 bbl/d pre-war. The second, parallel, 46-inch line has an optimal capacity of 500,000 bbl/d and was designed to carry Basra Regular exports.

Combined, the two parallel lines have an optimal capacity of around 1.6 million bbl/d. Unfortunately, Kirkuk-Ceyhan has been a main target for sabotage since June 2003, and is open only sporadically. Capacity on the line is believed to be as high as 800,000 bbl/d, with significant repairs still required. Among other problems, the line was damaged by a bridge ("Al Fatha," located near Baiji) that collapsed on it after being bombed by U.S. planes during the war, requiring major repairs, including the drilling of a new tunnel under the Tigris River (reportedly, that work was complete by late 2005).

In addition, the IT-1 pumping station on the Kirkuk-Ceyhan line was damaged by looters, but reportedly is operable manually. The IT-2 pumping station on the same line reportedly was looted and destroyed.

Iraq oil pipeline exports

Between 2001 and March 2003, Iraq and Syria utilized the 50-year-old, 32-inch Banias oil pipeline in violation of U.N. sanctions. The Banias line, from Iraq's northern Kirkuk oil fields to Syria's Mediterranean port of Banias (and Tripoli, Lebanon), reportedly was being used to transport as much as 200,000 bbl/d of Iraqi oil, mainly from southern Iraq, to Syrian refineries at Homs and Banias. The oil was sold at a significant price discount and freed up additional Syrian oil for export. Iraq and Syria also had talked of building a new, parallel pipeline as a replacement for the Banias line. In March 2003, flows on the pipeline were halted, although the U.S. Defense Department denied that its forces had targeted the line. In early March 2004, it was reported (by Dow Jones) that the Iraq-Syria pipeline was ready for use at 250,000 bbl/d.

During the Iran-Iraq War, Iraq also built a pipeline through Saudi Arabia (called IPSA) to the Red Sea port of Mu'ajiz, just north of Yanbu. IPSA has a design capacity of 1.65 million bbl/d, but was closed after Iraq invaded Kuwait in August 1990.

In June 2001, Saudi Arabia expropriated the IPSA line, despite Iraqi protests. In June 2003, Thamir Ghadban said that he hoped Iraq would be able to use the IPSA line again. However, the Saudis have stated that they are not willing to do this, having converted the line to carry natural gas to the Red Sea industrial city of Yanbu for domestic use.

In order to optimize export capabilities (i.e., to allow oil shipments to the north or south), Iraq constructed a reversible, 1.4-million bbl/d "Strategic Pipeline" in 1975. This pipeline consists of two parallel 700,000-bbl/d lines. The North-South system allows for export of northern Kirkuk crude from the Persian Gulf and for southern Rumaila crudes to be shipped through Turkey. During the 1990/1991 Gulf War, the Strategic Pipeline was disabled after the K-3 pumping station at Haditha as well as four additional southern pumping stations were destroyed.

In June 2003, the NOC estimated that it would take "a long time" to repair the K-3 pumping station and resume operations on the Strategic Pipeline. The whole system also reportedly is in need of modernization.

Iraq oil sells and exports

In July 2005, Iran and Iraq signed an MOU on a swap agreement involving construction of a 24-mile, 350,000-bbl/d oil pipeline from Basra to the Abadan refinery in southwestern Iran. In exchange, Iran would ship refined products back to Iraq. In addition, Iran could allow Iraq to export crude through the Kharg Island terminal and to import refined products through the Iranian port of Bandar Mahshahr.

One potential problem with this deal revolves around the ability of the Abadan refinery to process Basrah Light in significant volumes. Another is the fact that Iran already faces a severe shortfall in its own domestic gasoline supplies, making exports of gasoline problematic.

Iraqi oil sales and exports currently are being handled by the State Oil Marketing Organization (SOMO). The war and its aftermath seriously disrupted SOMO operations, but the organization has now been reconstituted and has resumed many of its operations. On June 5, 2003, SOMO issued its first oil sales tender since the war started, for 8 million barrels of Kirkuk crude stored in tanks at Ceyhan and 2 million barrels stored at Basra. On July 3, 2003, SOMO issued its second spot tender, for 8 million barrels of Basra Light.

In late July 2003, SOMO signed its first long-term contracts since the war, for Basra Light oil from Iraq's southern fields. As of January 2005, however, SOMO was forced to cut long-term contract volumes by 10 percent from February to June due to operational problems throughout the system. In early June 2005, Bakkaa was replaced by Musib al-Dujaili as SOMO director.

Source: Energy Information Administration