Iraq, Syria: Pipeline Repairs and Diplomatic Deals

Iraq, Syria: Pipeline Repairs and Diplomatic Deals

December 12, 2007 | 1749 GMT
http://www.stratfor.com/mmf/106673



Summary


Iraq and Syria will speed up repairs on an oil pipeline connecting the northern Iraqi oil field of Kirkuk and the Syrian port of Banias, Iraqi Foreign Minister Hoshyar Zebari has said. The deal, which is of great importance to Syria, only came about after behind-the-scenes talks with the United States.


Analysis


Iraq and Syria will accelerate the construction of an oil pipeline connecting the Kirkuk oil fields in northern Iraq to the Syrian port terminal of Banias on the Mediterranean, Iraqi Foreign Minister Hoshyar Zebari said Dec. 12.
Syria has a major interest in bringing this pipeline back to life. Diplomatic horse trading with the United States was key to the project’s initiation.


The Kirkuk-Banias pipeline, built in the early 1950s, was the target of a U.S. airstrike during the 2003 Iraq invasion. Since then, Sunni insurgents have struck it several times, rendering it completely inoperable since the war began. With a full nameplate capacity of 300,000 barrels per day (bpd), this 547-mile pipeline will need extensive rebuilding and repair. The patch job for the Iraqi side of the pipeline has been awarded to Russia’s Stroitransgaz, a subsidiary of state-owned firm Gazprom. The repairs probably will take years to complete, according to Iraqi energy officials. (The contract is currently in the survey stage.)


Between 2001 and March 2003, when Saddam Hussein was looking for ways to evade U.N. sanctions, Syria benefited greatly from smuggling as much as 200,000 bpd of Iraqi oil sold to the Syrians at a significant discount. With a rapidly dwindling oil supply, Syria desperately needs to free more of its own crude for export to remain afloat economically. Syria has seen its own oil production decline from its peak of 586,000 bpd in 1996 to 510,000 bpd in 2003 and 405,000 bpd in 2006, with around 230,000 bpd of that supply used domestically. Syrian Oil Minister Sufian al-Alaw painted an even grimmer picture of production with his recent announcement that the country’s oil production is expected to drop to 360,000 bpd in 2008.


This is why Syria has made the revival of the Kirkuk-Banias pipeline a key demand in its negotiations with the United States over Iraq. The Syrians struck a deal with the United States during the November Middle East peace conference in Annapolis, Md., which provided Damascus the bandwidth to reconsolidate its hold over Lebanon via the election of Gen. Michel Suleiman as president. In return, Washington expects Damascus to clamp down on Hamas’ exiled leadership and jihadist traffic into Iraq.


Negotiations between the Iraqi and Syrian governments have been stalled repeatedly in recent years, mainly because of U.S. pressure on Baghdad. But now that Washington and Damascus are dealing behind the scenes, the door has opened for Syria to gain a much-needed concession in the energy sector. And as long as Syria has a real stake in cutting down insurgent attacks to make this pipe dream a reality, the United States can expect a stronger commitment from the Syrians to deliver on their promises.



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So we have the Turks taking care of the Kurdish terrorists in the North. We've brokered a deal for the Syrians to begin clamping down on the Jihadist to the West. Iraq and the U.S are working on a pact for the long-term military presence in Iraq. And we are moving closer to negotiations with the Iranians to the East.

It appears the success of the surge in 2007 may be creating a domino effect in the region. I think as the outcome of this conflict continues to become evident, we will see nations getting on board with the U.S. because that is where the power will be.