By: AGBI

Iraq’s prime minister Ali Al-Zaidi will sign an agreement with a US company to revive a damaged oil pipeline which runs from Iraq to Syria when he visits Washington in mid-July.

The veteran banker and businessman, who took over last month, will meet President Donald Trump to discuss oil, including bolstering security for US companies involved in oilfield development in Iraq, Al-Sabah was quoted as saying in the official Iraqi gazette.

Al-Zaidi is likely to offer security guarantees so US companies can resume full operations in Iraq after scaling back work because of the Iran war.

“Al-Zaidi will also go ahead with signing a memorandum of understanding with the US investment company TI Capital for the rehabilitation of the Kirkuk-Baniyas pipeline,” the paper, which is issued by the information ministry, said.

Iraq and neighbouring Syria have been in talks to revive the defunct pipeline, which carried large quantities of Iraqi crude to the western Syrian port of Baniyas on the Mediterranean.

An Iraqi oil delegation visited Damascus in December for further talks on the project. The badly damaged 850km pipeline would supply crude to Syria and provide Iraq with a new outlet to market its oil. Capacity would be up to 700,000 barrels per day.

Iraqi media reports have estimated the cost at nearly $8 billion.

The pipeline, which dates back to the early 1950s, linked Iraq’s oil-rich northern province of Kirkuk with the port of Baniyas. It was crippled during the 1956 Suez crisis, before being revived in later years.

Between 1982 and 2000 Iraq shut the pipeline because of political rifts with Syria. It was disabled again after sustaining heavy damage during the 2003 US invasion of Iraq.

“That pipeline is very old and has been badly damaged, but I think it is a good option for Iraq’s plans to bypass the Strait of Hormuz, despite the fact that more than two thirds of Iraq’s oil exports go to Asia,” said Walid Khaddouri, former information director at the Kuwaiti-based Organization of Arab Petroleum Exporting Countries.

Iraq has stepped up a drive to build an internal and external pipeline network following Iran’s closure of the Strait of Hormuz. The bulk of Iraq’s oil exports pass through the strait, and its closure has pushed the Opec member’s crude output to just a third of its pre-war level.