A $55 billion project to bypass the Strait of Hormuz… and Iraq is at the heart of the plan.
Gulf states, including Iraq, are considering building an alternative oil pipeline network to bypass the Strait of Hormuz, at an estimated cost of $55 billion, amid escalating geopolitical risks, according to an analysis published by Reuters.
The analysis indicates that imposing fees on tanker transit, even at limited levels, could constitute a significant financial burden on oil producers, prompting them to seek long-term alternatives that reduce dependence on this vital corridor.
Iraq stands out as a pivotal element in the project, as the plan includes the construction of two pipelines extending from its south through Kuwait and Saudi Arabia, reaching ports on the Arabian Sea, such as the port of Duqm and the port of Salalah, which would allow the export of oil directly to Asian markets without passing through Hormuz.
Despite the project’s cost, the analysis suggests it may be economically viable, as it roughly equals the potential revenue over approximately 25 years, and it also gives countries in the region, including Iraq, greater flexibility in exporting oil and reduces risks associated with maritime routes.
The project is also expected to be jointly financed by the beneficiary countries, with the cost distributed according to the volume of use, while implementation may take several years, which means continued reliance on the Strait of Hormuz in the near term.
Shafaq.com