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Ammon News - Iraq and Jordan are in advanced talks to build an oil pipeline linking the oil-rich, southern city of Basra to the Red Sea port city of Aqaba, the Iraqi oil ministry said on Wednesday as OPEC's second-biggest producer seeks to find an alternative route to export its crude, spglobal reported.

Technical and commercial talks are currently underway for the project, which can only be built at a reduced cost of less than $9 billion, the ministry said in a statement.
Iraq has been in talks with Jordan for building the pipelines for at least a decade, as reported by spglobal.

Baghdad currently exports most of its crude from its southern oil terminals located in the Persian Gulf, where energy flows through the key chokepoint of Strait of Hormuz have been disrupted over the years.

The multibillion-dollar project, which foundered in 2014 due to security concerns and financing difficulties, is strategically important to Baghdad. A spate of attacks on oil tankers in the Strait of Hormuz provided over the past few years fresh impetus for the project.

In 2019, Iraq completed the prequalification process for companies interested in building the pipeline from the Rumaila field near Basra to Aqaba in Jordan.

The pipeline will be built in two stages and includes pump stations, storage tanks, and offshore terminals, the oil ministry said in 2019.

The first will have a 2.25 million b/d capacity, running 700 km from the Rumaila field to Haditha in Iraq's western Anbar province. The line will be built on an engineering, purchase, construction and finance (EPCF) basis, with the contractor providing the funding and repayment after the line comes online.

The second stage will have a 1 million b/d capacity, running 900 km from Haditha to Aqaba. It is to be built by the contractor on a build, operate, own and transfer (BOOT) basis.

The project is equally important to Jordan, which has little oil and gas of its own and has long sought to diversify its supply sources.

Even though Jordan is a willing participant, the pipeline will not be straightforward to build. Rumaila is located in Iraq's south which means the pipeline will need to traverse several Iraqi provinces to reach Jordan.

Although Iraq has largely quashed Islamic State group fighters, security is still a concern for investors.

Under the original plans, some 150,000 b/d of Iraqi oil would supply Jordan's Zarqa refinery with the rest of the 1 million b/d capacity exported via the Aqaba port.