Chevron, ConocoPhillips advance Iraq's Hormuz alternatives
Oil agreements have been announced or are expected to be signed on Friday, toward the end of Iraqi Prime Minister Ali Al-Zaidi's visit to the United States.
Several foreign oil majors have signed or are negotiating deals with Iraq this week to expand the country's oil sector and develop export routes that bypass the Strait of Hormuz, the Gulf chokepoint where traffic has been severely disrupted by the US-Iran war.
The agreements have been announced or are expected to be finalized Friday, toward the end of Iraqi Prime Minister Ali Al-Zaidi's five-day visit to the United States.
Details: The Financial Times reported Thursday that US oil major Chevron is in advanced talks with Iraq to form a consortium to build and revive pipeline infrastructure through Syria, allowing Iraqi crude exports to avoid the Strait of Hormuz.
Chevron is partnering with US-based TI Capital and a group owned by the Qatari-Syrian Al-Khayyat brothers to establish the consortium, the newspaper reported, citing four people familiar with the talks.
The proposed project includes a pipeline from southern Iraq to Kirkuk in the north, as well as a second line that would build on existing infrastructure running west through Syria to the Mediterranean port of Baniyas. The route would carry crude from southern Iraq to the Mediterranean Sea.
One person told the newspaper that the consortium was also exploring a pipeline from Basra that would split at Haditha, south of Kirkuk, before connecting to Syria, Turkey or Jordan.
Chevron also signed a memorandum of understanding with Iraq on Thursday to develop the West Qurna 2 and Nassiriya oil fields in southern Iraq.
Separately, American energy firm ConocoPhillips said Friday it will acquire a 42% stake in BP Energy Company of Kirkuk Limited as part of this week's broader push to develop Iraqi oil fields. The deal is expected to close by year-end, subject to regulatory approvals and other conditions.
BP ECKL holds the development and production contract for the Baba and Avanah domes of the Kirkuk oil field, along with the Bai Hassan, Jambur and Khabbaz fields.
“Kirkuk is a world-class resource base that can support Iraq’s long-term energy ambitions while creating value for both the country and BP,” CEO Meg O’Neill said in the statement.
Why it matters: New pipelines and upstream investment could provide a critical boost to Iraq's economy, which has been battered by the US-Israel-Iran war. The conflict, which began on Feb. 28, quickly led to the near-total closure of the Strait of Hormuz.
Iraq typically ships more than 90% of its crude through the strait. Before the war, nearly all southern exports departed from Basra's Gulf terminals, making Hormuz the country's primary export route.
Oil accounts for roughly 90% of Iraqi government revenue. The disruption has slashed exports, forced production cuts and reduced state income, putting pressure on public spending, imports and the dinar.
The agreements coincide with Zaidi's first visit to Washington since taking office in May. On Tuesday he met President Donald Trump at the White House, where the two leaders pledged to increase Iraq's oil output and announce several energy deals.
Zaidi also met members of Congress, including the House Foreign Affairs Committee, and visited Chevron's Houston headquarters on Thursday.
