Cabinet suspends approval of major oil export expansion

Political scrutiny of a contract is delaying a subsea pipeline project with the potential to lift export capacity by 500,000 bpd in a year.
Tugboats position a single point mooring (SPM) buoy in the Basra Gulf in January 2012 as Iraq expands its export capacity. (ALI ABU IRAQ/Iraq Oil Report)

Iraq's Cabinet has withdrawn funding approval for a major infrastructure upgrade that would have enabled Iraq to increase southern crude export capacity by half a million barrels per day in just over a year.

In a statement released after its June 20 meeting, the Cabinet said it had “suspended the implementation" of the authorization it granted less than a month ago to approve $417 million funding for the Sealine 3 project, to be led by the Dutch firm Boskalis and the state-run Basra Oil Company (BOC).

That approval had been seen as a major step toward easing infrastructure bottlenecks that are currently constraining Iraq's production capacity and revenue potential. A government spokesperson said that the Cabinet's reversal was based on the emergence of “new data” that necessitated more scrutiny.

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