Iraq's plans to export oil via a pipeline through Syria to avert future disruptions in the Strait of Hormuz will likely require four years of construction and cost at least $15 billion, sources with knowledge of the project told Reuters.
U.S. officials and energy executives are billing the plan, which is receiving initial support for feasibility studies from a consortium including Chevron (CVX.N), as part of a strategy to reduce the industry's reliance on a waterway that has been largely shut by the Iran war.
"Over the next two years, the strait is going to become irrelevant. It is going to become just another body of water," U.S. Treasury Secretary Scott Bessent said last week.
While a fifth of the world's oil and liquefied natural gas was shipped through Hormuz before the conflict, Bessent said "more than 50% or 70%" of those exports would instead be exported via underground pipelines.
But two sources directly involved in the project told Reuters the plans for the Iraq-Syria pipeline would take twice that long due to the need for new infrastructure and could face other hurdles.
Both sources asked not to be named due to the sensitivity of the matter.
NEW INFRASTRUCTURE TO REPLACE EXISTING WAR-DAMAGED PIPELINE
Iraq has been among the countries most affected by the Hormuz shutdown.
It exported around 3.6 million barrels of oil per day before the war, mainly through Gulf terminals near Basra, but shipped just 35.5 million barrels in total via Hormuz in July, according to state-run oil firm SOMO.
A pipeline linking Iraq's northern Kirkuk region to Syria's Mediterranean port of Banias already exists but was badly damaged by wars in Iraq and Syria and has not been in regular use since the 1980s.
Both sources said the plan would require laying entirely new infrastructure rather than rehabilitating the existing pipeline and cost at least $15 billion.
While part of the new pipeline would run largely along the same Kirkuk-Banias route, intact sections of that pipeline are not compatible with newly developed specifications and would be unusable, one of the sources said.
The second source said the project would include developing an entirely new integrated crude oil pipeline system that would link Iraq's southern and northern fields to a central hub in Haditha in western Iraq, then onwards to Banias.
The U.S. has welcomed the "rehabilitation and reconstruction" of the pipeline, saying it will have initial transport capacity of 2 million bpd of crude oil.
That would imply a major expansion of the old pipeline's capacity of about 300,000 bpd, which is less than a tenth of the oil volume Iraq exported through the Strait of Hormuz before the Iran war.
Both sources said work on the Iraq-Syria pipeline would take around four years, though one added that the timeline may also need to accommodate clearing old infrastructure and acquiring fresh land use rights from Syria's new administration.
ANOTHER POSSIBLE 'ACCESS TO MARKET' BUT STUDIES STILL NEEDED
Syria and Iraq have both signed separate memorandums of understanding with a consortium comprised of U.S. major Chevron, TI Capital and Qatar's UCC Holding to carry out technical and financial studies in preparation for the project.
Iraq's oil ministry and state-owned Syrian Petroleum Company did not respond to Reuters requests for comment on the project and the sources' timeline and cost assessments.
TI Capital and UCC Holding did not immediately respond to requests for comment. Chevron pointed to an earlier statement about the preliminary agreement and said it does not comment on details related to commercial matters.
During a press briefing last month, a Chevron executive said the project could offer "another access route to market" through the Mediterranean.
The executive said any pipeline would also need to connect to Iraq's southern fields of West Qurna 2 and Nassiriya, which Chevron is in negotiations to enter.
Chevron still needs to complete technical studies to determine whether the existing Iraq-Syria pipeline would need refitting, expanding or rebuilding, the executive said.
The company has not yet given estimates of the project's future export capacity.
"Usually, as these pipelines go, it's not 100% capacity available on day one," the executive said.
