Lebanon has offered Iraq an oil transit route to the Mediterranean during talks in Baghdad amid plans for Iraqi crude to bypass the Strait of Hormuz, officials from both countries told The National on Monday.
Iraq, Opec’s second-largest producer, has been one of those hardest hit by the Iran conflict, with the effective closure of the strait choking oil output. Its exports plunged from about 4.2 million barrels per day in February to 1.5 million in May, Opec data shows.
The Iraqi government is set to sign a 12-month deal with Turkey to continue pumping Iraqi crude through the Kirkuk-Ceyhan pipeline. The 970km pipeline has operated on and off since the 1970s and remains central to Iraq’s plans to raise production and diversify export routes. The current agreement is set to expire at the end of this month.
Another deal is also imminent with Syria to revive the long-defunct Kirkuk-Baniyas oil pipeline that once transported Iraqi crude to Europe via Syria. A branch from Syria reached the northern Lebanese port of Tripoli to feed a refinery and export platforms.
The main focus of Sunday's one-day visit to Baghdad by Lebanese Prime Minister Nawaf Salam was an attempt to “reshape the economic relationship which at the heart of it lies the energy file”, said Mudhir Mohammed Salih, a financial adviser to Iraqi Prime Minister Ali Al Zaidi.
Mr Salih added that the delegation proposed to use Lebanese territory as an additional outlet to the Mediterranean for Iraq.
“This idea, if realised, would grant Lebanon a significant logistical role and open a new trade window for Iraq to the world,” he said. “The closure of the Strait of Hormuz has put us in a difficult situation.”
Joe Saddi, Lebanon’s Energy Minister, who accompanied Mr Salam, said the main purpose of the talks in Baghdad was to examine how Iraqi crude and energy products could reach Mediterranean markets via Syria, with Lebanon positioned as a key transit and processing hub.
He described the discussions as “very positive” and said both countries had agreed to form a joint technical team, with an Iraqi delegation expected to visit Lebanon “soon” to examine how the plans could be advanced.
“At this stage, these are really just statements of intent,” he said. Technical studies would be among the first tasks carried out by the joint team, he added.
Mr Saddi said the scope of discussions goes beyond simply reopening an old line. Plans include studying the construction of a branch of the pipeline running from Syria to Tripoli in Lebanon, as well as the possibility of building a refinery that could help Lebanon meet domestic demand for refined petroleum products.
In the short term, Iraq could use existing infrastructure in Lebanon. “Iraq could use oil storage facilities in Lebanon, particularly in Tripoli, for exports, as it is currently doing in Syria,” he said. Since the outbreak of the Iran war late in February, Iraq has been delivering oil products to Syria by road and then on to the international market.
“It was important for Lebanon to be part of this project,” Mr Saddi said. Lebanon could benefit from pipeline transit fees and increased export activity through facilities in Tripoli, while a refinery could create jobs and supply refined petroleum products to the domestic market, he added. “With this project, everyone stands to gain,” he said.
Built in 1952, the pipeline ran about 850km from oil-rich Kirkuk in northern Iraq to the Mediterranean port of Baniyas in Syria. At the time, its daily capacity was about 300,000 bpd.
Operations came to a halt after the outbreak of the Iran-Iraq War in 1980 due to political disputes with the Syrian regime, a close ally of Tehran. The pipeline briefly reopened in 2000 to bypass UN economic sanctions on Iraq, following its invasion of Kuwait in 1990.
The pipeline was heavily damaged during the 2003 US-led invasion of Iraq that toppled Saddam Hussein and has remained out of service since.
Energy analyst Marc Ayoub said the ambition is clear but the timeframe is long. “They want to see whether they can reconnect or rehabilitate the infrastructure but that process will take years. It's not something that can be done quickly,” he said.
The discussions also covered a mechanism concerning arrears on imported heavy fuel oil from Iraq under a swap agreement signed in 2021 that ended last year, Mr Salih said. Lebanon has been unable to pay all of its dues to Baghdad.
The arrears remain a sticking point. “We have $1.2 billion in dues,” Mr Ayoub said. How Lebanon, where the economy is still reeling from the impact of the war, will repay the debt has yet to be established.
“Electricite Du Liban is struggling to collect money in different regions, particularly in the south and the Bekaa, because of the war,” Mr Ayoub said. “So currently, the money that is collected from Mount Lebanon, Beirut, the north and other regions outside the Bekaa is not enough to buy the fuel.”
