Baku, Azerbaijan, Nov.16
By Leman Zeynalova – Trend:
Iran and Iraq are creating an oil axis to compete with Saudi Arabia in terms of the oil export volume, Charles Ellinas, CEO of Cyprus-based energy consultancy e-CNHC told Trend.
He was commenting on the possible oil swap deal between Iran and Iraq. Earlier, Iraqi Oil Minister Jabbar al-Luaibi through a Facebook post said that Kirkuk will supply about 30,000 barrels per day (bpd) of oil to the Kermanshah refinery in western Iran. He also said that the figure may reach 60,000 barrels per day in future.
Iraqi oil minister has said that Kirkuk’s oil will be carried by road tankers and in the meantime, the sides will take measures to construct a pipeline to transfer the Arab country’s oil to Iran.
Iraq used to ship Kirkuk’s oil to the Turkish port of Ceyhan via a pipeline owned and operated by the Kurdistan Regional Government (KRG). However, following the recent tensions in the region, the Iraqi Oil Ministry took control of the oil filed and started talks with Iranian officials about the province’s oil exports through the Islamic Republic.
“The deal being discussed between Iran and Iraq is important, but at present the limitation is the amount of oil, only 30-60,000 b/d, small in comparison to Iraq's announced plan to increase production to 1 billion b/d. Another limitation is the fact that it has to be tracked all the way from Kirkuk to Iran. Iraq and Iran are talking about building a pipeline, but this is longer term. It is, though, of strategic importance as it will bypass KRG,” said the expert.
Ellinas noted that even though Iran and Iraq are rivals in the oil market, there is a strong political relationship between them.
Through an oil deal, Iran's influence in Iraq and the region, which politically and strategically has been growing, will be strengthened further, he believes.
“This agreement is twofold. First, it provides an export route for Kirkuk oil exports not dependent on KRG and second, it strengthens the link between Iran and Iraq. Important for Iran, is that in effect it creates an oil-axis that can compete in terms of volume of exports with Saudi Arabia - they are both predominantly Shia countries and in a turbulent region they become stronger through collaboration,” said the expert.
Further, from Iran's point of view, such a link contributes to counter-balancing the recently evolving rapprochement between Saudi Arabia and Iraq, added Ellinas.
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