Iran to Sign Iraq Oil Pipeline Deal in a Month

Baghdad, 26 April 2010 – Reuters

Iran hopes to sign a deal with Baghdad to build an oil export pipeline from Iraq’s southern city of Basra within a month, an Iranian diplomat said yesterday.

Iraq, which has the world’s third-largest oil reserves, signed a series of deals with global oil firms that could quadruple its crude output capacity to around 12 million barrels per day. Iraq has plans to expand its oil exporting facilities in anticipation of the rise in output.

The plan for a pipeline from Iraq’s southern city of Basra to Iran’s Abadan refinery is not new, as both Opec members signed an initial agreement in 2005. But the agreement has been on hold since then, stalled by violence unleashed after the 2003 US-led invasion and Washington’s reservations about any oil swap deals between the two countries.

The revived plan to export Iraqi crude was now being reviewed by Iraqi officials, Ali Heidari, the trade attache at the Iranian embassy in Baghdad, said. “We gave a draft of the agreement to the Iraqi side… It is in its final stages, it could be signed within a month,” he said.

Under the 2005 preliminary deal, Iraq was to export 150,000 barrels per day of crude through twin pipeline and Iran was to send gasoline, gas oil and kerosene to Iraq in return. But Heidari said the new plan includes exporting Iraqi crude “through Iranian regional waters”. Using the pipeline to send refined products from Iran back to Iraq could be added later.

“We have an agreement but it was not activated, which is to export crude oil from Iraq to Iran to refine it and send back. The Iraqi side put that part as a second stage,” he said. Iran is the main trading partner of Iraq and has been one of the largest investors in Iraq.

The United States and its European allies have been trying to pressure Iran to suspend its disputed nuclear programme, which the West suspects is aimed at making bombs. Tehran says the programme is for peaceful purposes and will not be halted.

The Islamic state is currently under US and UN sanctions. Iraq’s national election last month produced no clear winner and drawn-out talks to form a new government could take months, leaving the country in a power vacuum. The current caretaker government headed by Prime Minister Nuri Al Maliki does not have the power to propose new laws or sign contracts.

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