Chevron Considers Alternative Oil Export Route from Iraq to Syria, Bypassing Hormuz

MOU Signed for Development of Two Southern Iraqi Oil Fields
Still "a Long Way to Go" Before Final Agreement

Chevron, a U.S. oil company, is set to participate in the development of oil fields in southern Iraq and is reviewing the construction of a pipeline that would export crude oil to the Mediterranean via Syria. As Iran threatens to weaponize its closure of the Strait of Hormuz, blocking Iraq's export routes, Iraq is teaming up with U.S. companies to secure alternative transportation corridors.

According to reports from The Wall Street Journal (WSJ) and the Financial Times (FT) on July 16 (local time), Chevron is scheduled to sign a memorandum of understanding (MOU) with the Iraqi government on July 17 to participate in the development of two southern oil fields, Sukhornah 2 and Nasiriyah. Chevron will also conduct a technical and economic feasibility study for a pipeline project that would transport Iraqi crude oil to a Mediterranean port on Syria's coast.

The core plan involves constructing a pipeline network that would connect Iraq's southern oil fields, pass through Kirkuk in the north, and reach the port of Baniyas in western Syria. Options under discussion include rehabilitating the Kirkuk-Baniyas pipeline, which was damaged during the U.S. invasion of Iraq in 2003, or building a new route utilizing parts of existing infrastructure.

Another scenario under consideration is splitting the pipeline at Haditha, south of Kirkuk, from where it would connect toward Syria, Turkey, and Jordan. Chevron plans to conduct additional technical reviews before deciding whether to refurbish existing facilities or construct an entirely new pipeline. A senior Chevron official told the WSJ that there is "still a long way to go" before any talks progress into a final agreement.

FT reports that the project consortium includes, in addition to Chevron, Los Angeles-based investment firm TI Capital, and a company owned by the Al-Khayat brothers, who are Syrian-Qatari billionaires. Tom Barrack, a long-time associate of U.S. President Donald Trump, who served as U.S. Ambassador to Turkey and as a special envoy to Syria and Iraq, reportedly facilitated negotiations between the Iraqi government and companies.

The Iraqi government also recently authorized its state-run Basra Oil Company to review pipeline routes for crude oil exports together with the U.S. engineering company KBR. The U.S. government is also supporting Iraq and Syria in efforts to restore the Kirkuk-Baniyas pipeline.

Instability in the Strait of Hormuz Due to War with Iran

Iraq is rushing to secure alternative export routes because conflict between Iran and the United States has made passage through the Strait of Hormuz unstable. Before the war, the Strait of Hormuz was a critical route for about 20% of the world's crude oil. Most of the oil produced in southern Iraq is exported via the Strait of Hormuz.

However, after Iran announced the closure of the strait and attacked merchant ships, Iraq's oil exports and production plummeted. According to FT, after the Strait of Hormuz was blocked, Iraq reduced its oil production by more than half, causing a fiscal crisis for the government. Other Gulf oil-producing countries, such as Saudi Arabia and the United Arab Emirates (UAE), are also seeking to expand pipelines and storage facilities that bypass the Strait of Hormuz.

Separately, Chevron is seeking to acquire operating rights to Sukhornah 2, one of Iraq's largest oil fields, which is capable of producing about 460,000 barrels per day. The field was previously operated by Russian state-owned energy company Lukoil, but after U.S. sanctions against Russia made normal operations difficult, the Iraqi government reclaimed control. Since February, Chevron has been negotiating exclusively with Iraq's state-run Basra Oil Company.

However, it is expected that a considerable amount of time will be required before these plans lead to actual construction. Much of the existing pipeline infrastructure in northern Iraq and Syria has been destroyed in the war, and the proposed pipelines must pass through areas frequently attacked by armed groups, making it difficult to guarantee facility security. In recent years, U.S. energy companies have signed multiple non-binding agreements in Iraq and Syria, but only a limited number have proceeded to actual investment contracts.

This content was produced with the assistance of AI translation services.