Iraq Promises To Punish Deadline Busters

June 2009 Vol. 236 No. 6

Iraq’s Oil Ministry has stripped Russia’s Stroitransgaz of a contract it was awarded last year to rehabilitate the Kirkuk-Banias crude export pipeline as punishment for missed deadlines.

Iraq’s Oil Ministry has sharply demonstrated its intentions to punish oil companies and contractors who do not set their projects in motion within the deadlines agreed by stripping Russia’s Stroitransgaz of a contract it was awarded last year to rehabilitate the Kirkuk-Banias crude export pipeline to the Syrian Mediterranean coast.

The 300,000-bpd pipeline from Iraq’s northern oil hub of Kirkuk would break the country’s reliance on the Kirkuk–Ceyhan pipeline to Turkey’s Mediterranean coast as the sole outlet for its northern exports and make it less vulnerable to shut-ins. The pipeline was heavily damaged in the 2003 invasion and in the continuing violence in the Anbar province and the Iraqi-Syrian border areas. For years it had fallen into disuse as relations between Syria and Iraq deteriorated.

Despite such problems, Iraq is increasingly seeing the return of oil service companies, eager to get a share of the long line-up of projects that the Iraqis are hoping to launch over the coming few years.

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