Iran and Iraq Agree To Build A Pipeline

Via Stratfor (subscription required), a report that Iran and Iraq have reached agreement on constructing an oil pipeline from the southern Iraqi city of Basra to Iran’s southwestern city of Abadan.  As the article notes:

“…Considering the short distance — some 30 miles — and the flat terrain between Basra and Abadan, this pipeline can be built rather quickly and cost-effectively. As much as 430,000 barrels per day of Iraqi crude can be sent to the refinery in Iran, which will benefit both Baghdad and Tehran immensely. This will allow Iran access to cheap Iraqi crude, giving it the ability to reroute an equal amount from domestic consumption to export at a time when its economy is tanking because of prolonged periods of sanctions and low oil prices that have left the Iranian government scrambling for cash.

iraq-iran oil pipeline

Iraq is also trying to increase exports, but it still faces infrastructure problems and is in the early stages of seeking the involvement of major international energy companies in its oil industry. The Basra-Abadan pipeline will also allow Baghdad to increase its production and hence revenues. Therefore, from a cost and benefit point of view, this is the perfect project. But there is one hurdle: the U.S.-Iranian standoff.

The significant shift in U.S. attitude toward Iran since the Obama administration came into office, however, increases the likelihood of understanding between the two countries on certain issues. While it is unlikely that the United States will heed the Iranian demand to end sanctions anytime soon, it can choose not to place hurdles in the way of this Iranian-Iraqi project as a way to get Iran to negotiate on bigger issues. Thus, this pipeline — in sharp contrast with the litany of other, more ambitious Iranian energy projects — stands a fair chance of becoming a reality.”

This entry was posted on Friday, April 24th, 2009 at 8:23 am and is filed under Iran, Iraq.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

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