Daijiworld Media Network - Washington
Washington, Jul 18: US companies and the Iraqi government on Friday signed agreements and partnerships worth nearly $60 billion, including major energy projects aimed at creating alternative oil export routes that would reduce reliance on the Strait of Hormuz.
The agreements, signed at the US Chamber of Commerce, also cover sectors such as healthcare, communications and infrastructure.
While the pipeline projects are intended to provide alternatives to the Strait of Hormuz—through which nearly one-fifth of the world's oil passes—it remains unclear when they will become operational. Analysts at Goldman Sachs estimate that building pipelines in a single country takes at least two-and-a-half years, while these proposed projects would span two or more nations.
Iran has repeatedly threatened to close the Strait of Hormuz since the outbreak of the US-Iran conflict on February 28, triggering sharp fluctuations in global oil and gas prices.
On Friday, the price of West Texas Intermediate crude rose nearly 5 per cent to around $88 a barrel, compared with about $67 before the conflict began. Prices had crossed $110 a barrel in early April before easing following a temporary truce, but have risen again amid renewed hostilities.
US Ambassador to Turkey Thomas Barrack said the planned oil pipeline agreements would eventually make "the Strait of Hormuz an afterthought."
The agreements followed a meeting in Houston on Thursday between Iraqi Prime Minister Ali Falah al-Zaidi and Chevron executives, during which the Iraqi leader urged the US energy company to accelerate and expand its investments in Iraq.
Addressing the signing ceremony on Friday, al-Zaidi said Iraq was seeking long-term investments and strategic partnerships rather than merely awarding contracts for individual projects.
He reaffirmed his government's commitment to dialogue and cooperation with the US Chamber of Commerce, describing it as "the place where economic decisions are made."
Chevron signed three agreements with the Iraqi government. Jake Spiering, the company's president of corporate business development, said two agreements would focus on increasing oil production, while the third would support investment in a new pipeline that would provide an additional export route from Iraq to international markets.
"This is very important for energy security," Spiering said.
Goldman Sachs analysts said earlier this week that seven pipeline projects currently under development across the region could collectively carry around 14 million barrels of oil per day by the end of 2028, equivalent to about 60 per cent of the volume that previously passed through the Strait of Hormuz. Before the conflict, around 23 million barrels per day were transported through the waterway.
The conflict has placed Iraq, which hosts both US military bases and Iran-backed militias, in a strategically sensitive position. Syria, meanwhile, has largely remained outside the conflict and has promoted itself as an alternative transit corridor for regional energy exports despite continuing to recover from its prolonged civil war.
With exports through the Strait of Hormuz significantly disrupted, some Iraqi oil has been transported by road into Syria and shipped to European markets through the port of Baniyas. A key border crossing between northern Iraq and Syria, reopened in April after more than a decade, has also been presented as an additional export route.
Although transporting oil overland is more expensive and less efficient than shipping through the Strait of Hormuz, the proposed pipeline network is expected to enable Iraq to export larger volumes of crude through Syria and Turkey, strengthening regional energy security.