Iraq, Syria sign US-backed deal to revive oil pipeline bypassing Hormuz

Iraq and Syria signed a memorandum of understanding in Washington on Friday to rehabilitate the long-defunct Kirkuk-Baniyas crude oil pipeline, a US-brokered agreement aimed at creating an export route that bypasses the Strait of Hormuz amid the ongoing US-Iran conflict.apnews+2

The deal, signed at a US-Iraq business summit at the US Chamber of Commerce, is part of a broader package of roughly $60 billion in agreements and partnerships between Iraq and the United States spanning energy, healthcare, communications, and infrastructure.thenationalnews+1

The Pipeline

The Kirkuk-Baniyas pipeline is an 800-kilometer corridor connecting Iraq's northern oil fields near Kirkuk to Syria's Mediterranean port of Baniyas. It has been largely offline since it was damaged during the 2003 US-led invasion of Iraq.easternherald+2

The US State Department described the project as a "priority infrastructure project of bilateral and regional strategic significance." Upon completion, the pipeline is projected to carry 2 million barrels per day of crude oil, according to the State Department.thenationalnews+2

Chevron ↗ 1.00% is set to join a consortium with TI Capital and Qatar's UCC Holding to undertake the rehabilitation, with estimated costs ranging from $4.5 billion to $8 billion. The signing was presided over by US Energy Secretary Chris Wright.thenewregion+3

Bypassing the Strait of Hormuz

The pipeline's revival is driven by Washington's desire to reduce Iran's leverage over global energy flows. Iraq currently relies on the Strait of Hormuz for roughly 95 percent of its oil exports, a vulnerability exposed during the ongoing US-Iran conflict.facebook

Thomas Barrack, US Ambassador to Turkey and special envoy for Syria and Iraq, said at the summit that Iraqi Prime Minister Ali al-Zaidi's regional economic vision would make the Strait of Hormuz "an afterthought in two years."abcnews+1

Analysts have cautioned that even if completed, the proposed pipelines are unlikely to fully replace the Strait of Hormuz as the world's primary energy corridor, noting that Asian economies including India, China, Japan, and South Korea will continue to rely on Gulf shipments passing through the strait.swarajyamag

Broader Deals

The pipeline agreement was one component of more than 50 preliminary deals signed Friday. ConocoPhillips ↗ 1.10% agreed to acquire a 42 percent stake in BP ↗ 1.31% Energy Company of Kirkuk Limited to develop four producing oilfields in northern Iraq. Chevron also signed accords to further develop the West Qurna 2 and Nasiriyah oilfields.thenationalnews

Reuters first reported on July 14 that the United States was supporting efforts to revive the Iraq-Syria pipeline, with talks focusing on the Kirkuk-Baniyas route.reuters