Iran, Iraq discuss crude oil swap deal

ERBIL, Kurdistan Region (Kurdistan 24) - Iranian and Iraqi Ministers met in Vienna this week to discuss crude swap deal to supply Iran refineries and unlock Kirkuk oil.

Iraqi Oil Minister Jabbar al-Luaibi met his Iranian counterpart Bijan Zanganeh after the two negotiated extending OPEC's output cut deal.

Iran's Zanaganeh told journalists the deal will have two phases, including trucking crude from Kirkuk followed by constructing a pipeline, installed between Iran's Tang Fani pumping station in the southwest of the country and Kirkuk field.

"For the second phase, we need to sign a contract for studies. A consultant has been chosen and the service description should be decided. From Tang Fani, the oil can go both to northern refineries or go south and then reaches exports lines," Zanganeh said.

"I hope we sign the deal next week for the truck transfer, so we can slowly start the oil imports [and] raise it to 60,000 b/d. The important thing is to start the work and this relationship, which is a strategic one between Iran and Iraq, is established," he added.

The pipeline is expected to be roughly 200 km long in both countries and is funded by both governments. Authorities expect the pipe will be ready in two years.

The plan is to refine Kirkuk oil in Iran while Iran would send an equivalent amount of crude to Iraq's State Oil Marketing Organization from the southern Persian Gulf terminals.

Luaibi said trucking is intended to start at 15,000 b/d and cap at 30,000 b/d, but it could increase to 60,000 b/d.

Iran and Iraq have not figured out the formulas to measure equivalent quantities because the Kirkuk grade and Iran's export grades will differ.

The sides first discussed the deal after the Iraqi government--supported by Iranian trained Shia paramilitary--took Kirkuk from the Kurdistan region in October 2017.