TEHRAN, 19 July 2005 — Iran is poised to sign an agreement to swap Iraqi crude for desperately needed refined products, Oil Minister Bijan Namdar Zanganeh said yesterday as Iraqi Prime Minister Ibrahim Jaafari wrapped up a landmark visit. Three new pipelines across the neighbors’ southern border will be required for the project, which will be financed and constructed by Iran, Zanganeh said.
The minister said fuel was expected to start flowing within 10 months of the agreement’s signature, which the official IRNA news agency said was due within a month. “The idea is for Iran to buy 150,000 barrels per day of Basra light crude. In return, Iran will provide petrol, heating oil and kerosene,” he said, adding that the latter two products would come from Iranian refineries but that the petrol would have to be imported. “Construction and financing will be Iranian,” the minister said.
Iraq has faced chronic shortages of refined products ever since the US-led invasion of 2003, as insurgents have targeted its oil infrastructure, bringing production from the northern fields around Kirkuk to a virtual standstill. Even though Iraq has the world’s second largest proven reserves of crude, the government has been forced to import refined products from a number of neighboring countries.