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Iraq would be compensated with an equivalent quantity of Iranian crude to be exported from the Persian Gulf.
Iraq would be compensated with an equivalent quantity of Iranian crude to be exported from the Persian Gulf.

Zanganeh, Luaibi Discuss Oil Swap Deal in Vienna

Zanganeh, Luaibi Discuss Oil Swap Deal in Vienna

Oil Minister Bijan Namdar Zanganeh met with his Iraqi counterpart Jabbar al-Luaibi in Vienna late Thursday for the latest round of talks on the terms of a crude swap deal that will help supply some of Iran's refineries with feedstock and unlock Iraq's shut-in crude at Kirkuk.
"The first phase of the swap deal will involve trucking crude from Iraq's northern Kirkuk field, followed by the construction of a pipeline in the second phase," Zanganeh told journalists after the meeting that took place following an OPEC meeting to discuss global crude cuts, Platts reported.
The pipeline will be installed between Iran's Tang Fani pumping station in the southwest and Iraq's 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 barrels per day. The important thing is to start the work and this relationship, which is a strategic one between Iran and Iraq, is established."
Zanganeh said the pipeline, funded by both governments, will be roughly 200 km long in Iraq and about the same in Iran, and should not take more than two years to come into operation.
Luaibi explained the idea behind the swap deal, which would see Kirkuk oil refined in Iran, while Iraq would be compensated with an equivalent quantity of Iranian crude to be exported from the southern Persian Gulf terminals.
Trucking is intended to start at 15,000 bpd and cap at 30,000 bpd, but Luaibi said it could increase to 60,000 bpd.
Formulas for the equivalent quantities, because the Kirkuk grade and Iran's export grades are different, still need to be worked out.
The agreement was first announced earlier this month, following the Iraqi government's retaking of oilfields that the semi-autonomous Kurdistan region appropriated in 2014.
Iraq has been in talks with Iran for a year over building an export pipeline and the trucking deal could either be an easy win to monetize that stranded crude or a stopgap measure before the pipeline is built.

--- US Sanctions
Zanganeh also said in Vienna on Thursday that energy-related firms from the US are the main losers of sanctions imposed on Iran, stressing that the US policy toward Iran is both confusing and self-defeating.
"I don't understand why US companies cannot enter the Iranian market. They cannot get involved in the biggest oil projects in the world, taking place here in Iran," he was quoted as saying by CNBC.
In 2016, restrictions previously imposed against Iran's nuclear program were removed, but Washington has continued to bar American citizens and companies from most forms of investment or trade with the country.
Zanganeh said Iran had "no difficulty" with US expertise or capital and that his country needed billions of dollars of investment to complete several major projects designed to ramp up Iranian oil output.
The OPEC veteran said the US restrictions had not prevented companies from other nations signing up to invest.
"So far, everything is going well. We hope we can sign some contracts before the end of this Iranian year," he said.
Zanganeh said contracts for oil infrastructure development were typically around three years long and would not be greatly affected by any OPEC agreement made at the current meeting.
Earlier on Thursday, when asked about the prospect of extending a deal to cut crude supplies by six or nine months, Zanganeh said the nine-month proposal is "better", adding that the longer the term of the deal, "the more the market will be stabilized."
He said most OPEC members are happy with the price range of $60-65 per barrel.

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