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Simon Watkins

Simon Watkins

Simon Watkins is a former senior FX trader and salesman, financial journalist, and best-selling author. He was Head of Forex Institutional Sales and Trading for…

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Why Iran Is Desperate To Finish This Pipeline

  • Iran plans to resuscitate the 825-kilometre Iraq-Syria oil pipeline that linked Iraq’s Kirkuk region with the Syrian port of Banias on the Mediterranean.
  • Iraq’s Oil Ministry exclusively confirmed to OilPrice.com last week that it was not just Iraqis who were looped into these discussions about this key infrastructure link between Iraq and Syria, but Iranians and Russians too.
  • Russia’s interest alongside Iran in such a plan aligns with Moscow’s broad foreign policy objective of creating chaos where possible, into which it can eventually project its own solutions.
Iran Russia Flags

Iran has long been desperate to create a permanent ‘land bridge’ from Tehran to the Mediterranean Sea by which it could exponentially increase the scale and scope of weapons delivery into southern Lebanon and the Golan Heights area of Syria. These would have a huge force multiplier effect for Iran’s own Islamic Revolutionary Guard Corps (IRGC) in Syria - and for its proxy Hezbollah forces in Lebanon and Hamas in Palestine – to use in attacks on Israel. This cornerstone policy of Iran since its 1979 Islamic Revolution was always geared towards provoking a broader conflict in the Middle East that would draw in the U.S. and its allies into an unwinnable war of the sort seen recently in Iraq and Afghanistan. The aim of this on Iran’s part was to unite the world’s Islamic countries against what it believes to be an existential battle against the broadly Judeo-Christian democratic alliance of the West, with the U.S. at its centre. Given the currently febrile situation in and around Israel, stoked by support from Iran, news last week that a key link between Iraq and Syria – both heavily influenced by Iran – is to be restored will only add to Washington’s problems.

According to comments from senior officials of Iraq’s state-owned North Oil Company (NOC) in Kirkuk, plans are afoot to resuscitate the 825-kilometre Iraq-Syria oil pipeline that linked Iraq’s Kirkuk region with the Syrian port of Banias on the Mediterranean. “The meeting [about restarting the pipeline] covered required work, timetables and cost of rebuilding,” said NOC director general, Barkan Abdullah. A senior oil industry source who works closely with Iraq’s Oil Ministry exclusively confirmed to OilPrice.com last week that it was not just Iraqis who were looped into these discussions about this key infrastructure link between Iraq and Syria, but Iranians and Russians too. “The plans for this link to be brought back have been in place since June 2017, when it was overtly talked about in terms of being the ‘Iran-Iraq-Syria pipeline’ and was seen in a similar context to the gas pipeline plan of that name,” he said. “The plans were for the pipelines to run from [Iraq’s] Kirkuk to Banias [on Syria’s Mediterranean Sea coast] via Haditha [in Iraq], with an initial nameplate capacity of 300,000 barrels per day [bpd], and Russia was to be involved in both of the plans, and that is unchanged now,” he added. 

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Russia’s interest alongside Iran in such a plan aligns with Moscow’s broad foreign policy objective of creating chaos where possible, into which it can eventually project its own solutions. Under the Russian- and Iranian-backed regime of President Bashar al-Assad, Syria has four huge strategic advantages to Russia, as analysed in depth in my new book on the new global oil market order. Briefly, first, it is the biggest country on the western side of the Shia Crescent of Power, which Russia has been developing for years as a counterpoint to the U.S.’s own sphere of influence that had been centred on Saudi Arabia (for hydrocarbons supplies) and Israel (for military and intelligence assets). Second, it offers a long Mediterranean coastline from which Russia can send oil and gas products (either its own or those of its allies, notably Iran) for cash export, plus weapons and other military items for political export. Third, it is a vital Russian military hub, with one major naval port (Tartus), one major air force base (Latakia) and one major listening station (just outside Latakia). And fourth, it shows the rest of the Middle East that Russia can and will act decisively on the side of the autocratic dynasties across the region. 

Happily for Russia, Syria also has significant oil and gas resources that can be developed and used by the Kremlin to offset part of the costs it incurs as part of its geopolitical manoeuvring. According to Russia’s then-Deputy Prime Minister, Yuri Borisov, in the aftermath of Russia’s direct military intervention in Syria in September 2015, Moscow was working to restore at least 40 energy facilities in Syria, including offshore oil fields, as also analysed in my new book on the new global oil market order. This was part of a wider development programme aimed at bringing back the full oil and gas potential of the country as it was before July 2011 when, inspired by the Arab Spring revolutions, defectors from the Syrian army formed the Free Syrian Army and commenced armed conflict across the country. Prior to that point, Syria was a significant oil and gas producer in the global hydrocarbons markets - at the beginning of 2011, producing around 400,000 bpd of crude oil from proven reserves of 2.5 billion barrels. Before recovery began to drop off due to a lack of enhanced oil recovery techniques being employed at the major fields – mostly located in the east near the border with Iraq or in the centre of the country, east of the city of Homs – it had been producing nearly 600,000 bpd. For the period when the largest producing fields – including those in the Deir-ez-Zour region, such as the biggest field, Omar – were under the control of ISIS, crude oil and condensates production fell to about 25,000 bpd before recovering again. 

A sizeable proportion of this crude oil output went to Europe, which was importing at least US$3 billion worth of oil per year from Syria up to the beginning of 2011, according to the European Commission, as also analysed in my new book on the new global oil market order. Much of the key infrastructure to handle oil from Syria remained operationally in place for a long time after the 2011 troubles began. Most of this, some 150,000 bpd combined, went to Germany, Italy, and France, from one of Syria’s three Mediterranean export terminals - Banias, Tartus and Latakia. Syria’s gas sector was at least as vibrant as its oil sector, and less of that was damaged in the first few years of the conflict. With proven reserves of 8.5 trillion cubic feet (tcf) of natural gas, the full year 2010 – the last under normal operating conditions – saw Syria produce just over 316 billion cubic feet per day (bcf/d) of dry natural gas. The build out of the South-Central Gas Area, built by Russia’s Stroytransgaz, had started up by the end of 2009 and had boosted Syria’s natural gas production by about 40 percent by the beginning of 2011. This allowed Syria’s combined oil and gas exports to generate a quarter of government revenues at that point, and to make it the eastern Mediterranean’s leading oil and gas producer at the time. After the onset of the domestic armed uprising in July 2011 and then ISIS moving west from Iraq into Syria in September 2014, gas production diminished to less than 130 bcf/d before recovering again.

For both Russia and Iran, the oil and gas pipelines originating in Iran and then running through Iraq and into Syria will also act as a counterpoint to the Arab Gas Pipeline that begins near Arish in Egypt and runs to Jordan, Syria, and Lebanon, with connections to Israel. This has long been regarded as a ‘U.S.’ pipeline by both Moscow and Tehran, which have repeatedly looked at plans to reverse these energy flows, and to add extensions to the Iran-Iraq-Syria pipelines running into at least Jordan and Lebanon. Moves to this ultimate end have been seen in the repeated oil and gas deals done between Iraq (although much of the oil and gas resources come from Iran) and Jordan and Lebanon, and in plans to rope them into a pan-Middle Eastern power grid with Iran (and Russia) at the centre, as also analysed in full in my new book on the new global oil market order.

By Simon Watkins for Oilprice.com

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Leave a comment
  • Mamdouh Salameh on October 25 2023 said:
    Plans for rehabilitating the 825-kilometre Iraq-Syria oil pipeline that linked Iraq’s Kirkuk oilfields with the Syrian port of Banias on the Mediterranean or building a new one aren’t new. They have been talked about them since the days of the late Saddam Hussein.

    It is the same story with the Iraq-Aqaba oil pipeline to the Jordanian port of Aqaba on the Red Sea which has been in discussion between the governments of Jordan and Iraq also since the days of Saddam Hussein.

    Both of them were motivated by helping Iraq then at war with Iran and later under US sanctions to find new export outlets for its oil via Jordan’s Red Sea port of Aqaba and Syrian’s Mediterranean port of Banias. In so doing both Jordan and Syria would also satisfy their oil needs and also earn some transport fees from Iraq.

    But like all projects relating to Iraq, I don’t believe them happening until they are a reality.

    Iran will benefit strategically because of its presence in Syria and also from expanding its oil exports via Iraq and Syria to the Mediterranean region. For Russia, any strengthening of Syria’s economy is in itself a strategic benefit for it.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert

Leave a comment




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