Lebanon offers Iraq transit route for crude oil to bypass Strait of Hormuz

Lebanon has proposed an alternative oil transit route for Iraq to bypass the Strait of Hormuz, according to officials from both nations. During recent talks in Baghdad, Lebanese and Iraqi authorities discussed potential arrangements that would allow Iraqi crude oil to flow into the Mediterranean through Lebanon, offering a solution to the challenges posed by the ongoing crisis in the region. Iraq, which is the second-largest oil producer within the Organization of the Petroleum Exporting Countries (OPEC), has faced severe disruptions in its oil exports due to the closure of the Strait of Hormuz, a critical shipping channel. According to OPEC data, Iraqi oil exports dropped significantly from around 4.2 million barrels per day in February to approximately 1.5 million barrels per day in May. This decline has placed pressure on Iraq to find alternative routes for exporting its oil. In response to these challenges, the Iraqi government is preparing to sign a 12-month agreement with Turkey to continue transporting Iraqi crude through the Kirkuk-Ceyhan pipeline. This pipeline, stretching nearly 970 kilometers, has been operational since the 1970s and plays a vital role in Iraq's strategy to increase production and diversify its export routes. However, the current agreement is set to expire at the end of the month, prompting the need for new solutions. Simultaneously, another agreement is being prepared with Syria to reactivate the long-disused Kirkuk-Baniyas pipeline. This pipeline once facilitated the transport of Iraqi crude to Europe through Syria, with a branch extending to the northern Lebanese port of Tripoli, feeding a refinery and export platforms. Discussions centered on the potential revival of this infrastructure, which could provide a direct link to European markets. Lebanese Prime Minister Nawaf Salam visited Baghdad over the weekend, focusing on reshaping the economic relationship between the two countries, particularly emphasizing the energy sector. Financial adviser to Iraqi Prime Minister Ali Al Zaidi, Mudhir Mohammed Salih, stated that the Lebanese delegation proposed using Lebanese territory as an additional outlet to the Mediterranean for Iraq. He noted that this initiative could grant Lebanon a significant logistical role and open up new trade opportunities for Iraq globally. Energy Minister Joe Saddi, accompanying Salam, highlighted the importance of examining how Iraqi crude and energy products can reach Mediterranean markets via Syria, positioning Lebanon as a crucial transit and processing hub. He described the discussions as "very positive," noting that both sides have agreed to establish a joint technical team. An Iraqi delegation is expected to visit Lebanon soon to explore ways to advance the plans. At present, these discussions remain at the level of statements of intent. Technical studies will be among the initial steps taken by the joint team. Saddi emphasized that the scope of the discussions extends beyond merely reviving an old pipeline. Proposals include investigating the construction of a pipeline branch from Syria to Tripoli in Lebanon, as well as the possibility of establishing a refinery to meet Lebanon's domestic demand for refined petroleum products. In the short term, Iraq could utilize existing infrastructure in Lebanon for oil storage and exports, similar to how it currently operates in Syria. Since the onset of the Iran-Iraq conflict in late February, Iraq has been transporting oil products to Syria by road before exporting them internationally. Saddi stressed the significance of Lebanon's involvement in this project, suggesting that it could bring benefits such as pipeline transit fees and increased export activity through facilities in Tripoli. Additionally, a refinery could generate employment and supply refined petroleum products to the local market. The Kirkuk-Baniyas pipeline, originally constructed in 1952, extended approximately 850 kilometers from the oil-rich region of Kirkuk in northern Iraq to the Mediterranean port of Baniyas in Syria, with a daily capacity of about 300,000 barrels per day. Operations ceased following the outbreak of the Iran-Iraq War in 1980 due to political tensions with the Syrian regime, a close ally of Iran. The pipeline briefly resumed operations in 2000 to circumvent UN economic sanctions imposed on Iraq after its invasion of Kuwait in 1990. It suffered extensive damage during the 2003 U.S.-led invasion of Iraq, which led to the fall of Saddam Hussein.