Iraq moves to diversity oil export options from Hormuz

Iraq moved on Sunday to diversify its oil export routes to reduce the impact of a potential closure of the Strait of Hormuz by Iran on Baghdad’s oil-dependent income, as well as the world economy.

The plans, recommended by parliament’s energy and economics committees, include efforts to ramp up exports along a pipeline to Turkey, increase the amount of oil transported by road, and “urgently” fix disused transport pipelines, according to a statement from government spokesman Ali al-Dabbagh.

He said Iraq’s cabinet on Sunday adopted the recommendations which also included working to reopen the Banias-Tripoli pipeline that runs from Syria to Lebanon but has been closed since 1990, and, if thawing Iraq-Saudi relations continue to improve, a disused pipeline through Saudi Arabia as well.

The committees “also recommended that in the short term there be more efforts to convince the Iranian and American sides of the necessity of avoiding the closure of the Strait of Hormuz because it will damage the global economy, and Gulf countries especially.”

Iran has threatened retaliation for fresh Western sanctions over its nuclear program, including a possible disruption of shipping through the Strait of Hormuz, a Gulf chokepoint for global oil shipments, including 80 percent of Iraq’s oil exports.

Dabbagh told AFP in an interview last month Iraq was worried by U.S.-Iran tensions and would be one of the worst affected if the strait was closed to shipments of crude oil.

Iraq currently produces more than three million barrels per day, with exports averaging about 2.1 to 2.2 million bpd. Crude sales account for the lion's share of Baghdad's government income.

Offering crude to Sri Lanka

Iraq on Sunday also come forward to offer “substantial quantities” of crude oil to Sri Lanka, as the island desperately looks for alternatives to Iranian crude.

Iran supplies nearly 92 percent of Sri Lanka’s imported crude. But supplies have hit a snag in the face of U.S.-led sanctions aimed at spurring Tehran to abandon its nuclear program.

Any country importing goods from Iran after would be subject to U.S. penalties.

The Colombo-based Sunday Times newspaper quoted Petroleum Ministry officials saying that Sri Lanka would stop crude oil imports from Iran from March 29, ahead of the U.S. June 28th deadline.

Sri Lanka’s refinery, built with Italian technology in 1968, can handle Iranian or Saudi light crude and talks were underway to get more Saudi oil, as well as increase refined petroleum product imports from Iraq and Oman.

India has said it will continue to import oil from Iran, joining China in refusing to bow to intensifying U.S. pressure not to do business with the Islamic republic.