IRAQI EXPORT PIPELINE OPTIONS: A COMPARISON

Created: 2/1/1984

OCR scan of the original document, errors are possible

Central IniclligrKC Agency

DIRECTORATE OF INTELLIGENCE

14 Iraqi Export Pipeline Options:A Comparison^

Summary

Iraq's agreement in principle to proceed with constructionipeline through Jordan could go a long >jgy toward easing Iraqi financial worriesust rations <tttmtmaaam

The Petroline spur ia Iraq'6 moot economtf pipeline alternative because it is the shortest route and could begin generating critical revenuee inS. Other alternatives could not generate revenue until6

Iraqi Export Pipeline options: Cft Comparison^ Introduce ion

Iraq's economic difficulties have prompted Baghdad to see* ways to expand its crude oil exports to earn the revenues it needs to continue its war of attrition with Iran. umber of proposals have been presented to Baghdad and discussed in the West, including new export pipeline alternatives through Jordan, Turkey, and Saudi Arabia. Fach option provides Iraq with varying economic opportunities and has different strategic and security implications for countries in the region and the United states.

Export Pipeline Alternatives

the

pipeline that would follow old Iraq Detroleum Company north of Amman and then proceed

Amman and Baghdad haveillion barrel-per-day)

right-of-way established by the IPC) lines from Kirkukoint south to al Aqabah over new

Turkish Option. While not under current consideration by the Iraqi government, looping ofurkish pipeline or constructionecond parallel line could be completed in a yearalfinimum cost of illion.

o Looping theipeline that passes through the existing pump stations--would raise the capacity of the expanded Mediterranean outlet.

o Constructioninch pipeline along the route wouldapacity to the route. As with the Jordanian option, use of the new pipeline would be limited to less,

SECRET NOFORN NOCONTRACT PROPIN ORCON

Economics of the Pipeline Alternatives

Baghdad's efforts to achieve prompt new sources of oil revenue, have focused largely on exploring pipeline options through Saudi Arabia and Jordan. In recent months key IraqiIraqi President Saddampublicly stated their preference for the constructionpur to Petroline in Saudi Arahia. This project has the potential to provide an additional S5 billion in annual revenue beginning inassuming exports of.H

By virtue of its relative brevity and simplicity, the Saudi spur pipeline would be the most economical and expeditious pipeline alternative to construct. The Jordanian and Turkish pipelines, which would eachoump stations and include atdditional kilometers of pipe, are essentially of equal economic merit. Iraqi profits on oil shipments from Turkey could run as much asents per barrel higher than those through Jordanesult of Suez Canal transit fees, but this could be offset by differences in pipeline transit fees between the countries and use of VLCC's from the Red Sea. The larger export capacities of the Jordanian and Turkish pipelines will result in greater revenues for Iraq over the Longer term and offer the West access to larger crude volumes.

planned LPG pipelinescalontrollt temporarily disrupted past. f)

run through territory close to Irany Kurdish tribesmen, whose sabotage has oil flows on several occasions in the

the government mucn neeaea additional pipeline would also provide an alternativescheduled to close In crude oil for Jordan's Zarqa refinery, and

An Iraqi to Saudiource of offers promise for the

etrochemicalroject of this ma economic ties with Raghdad. Q;

industry within the country. In initude would strengthen Jordanian

Prospects and Implications

esumption in oil exports through the Persian Gulf,ajor new export pipeline will provide Iraq with the

not be completed Given the prospects for continued weakness in the oil market, construction of any pipeline that allows Iraq to expand exports in the next two years or so could bring added downward pressure on oil prices. fS NF)

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