Iraq-Jordan Oil Pipeline: Financially Costly, Contractually Complex

By Ahmed Mousa Jiyad.

Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

Iraq-Jordan Oil Pipeline -- Financially Costly, Contractually Complex

Since 1983 the Basra-Aqaba, or Iraq-Jordan, oil pipeline (IJOP) has been on and off the screen of the bilateral relation between the two countries.

And from 2011 to date, every Iraqi government had "approved a frame-agreement" relating to the same pipeline, but none of these agreements was published and, thus, nothing known about the terms of these, so claimed, approved agreements!

Scope of the pipeline, route, length, funding, execution, duration and cost have been on a changing course since 2011, but the most dramatic change is the staggering cost, which reportedly, increased from $3 billion to $26 billion between 2016 and 2022!

No surprise, therefore, that this pipeline has been viewed diametrically differently and with absence of full transparency, on the part of the Ministry of Oil (MoO) and its affiliate SCOP, the feasibility of this project remains a pure intelligent guessing.

This article addresses first the different views and what prompted them by recent development and information on the pipeline, then in part two calculates the barrel-cost corresponding to actual pipeline utilization.

Part three examines the re-export options in the comparative, and part four provides cautionary notes on the limitation of cash flow analysis for such a project.

Moving from the quantitative mode to real life environment, part five debates strategic considerations, geopolitical vulnerability and security risks and that is complemented, in part six, by highlighting and identifying the needed contractual and legal modalities; then the article ends with concluding remarks.

Click here to download the full report in pdf format.

Mr Jiyad is an independent development consultant, scholar and Associate with the former Centre for Global Energy Studies (CGES), London. He was formerly a senior economist with the Iraq National Oil Company and Iraq's Ministry of Oil, Chief Expert for the Council of Ministers, Director at the Ministry of Trade, and International Specialist with UN organizations in Uganda, Sudan and Jordan. He is now based in Norway (Email: mou-jiya(at)online.no, Skype ID: Ahmed Mousa Jiyad). Read more of Mr Jiyad's biography here.

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