17.05.202114:10 Forex Analysis & Reviews: Revival of the Egypt-Syria-Iraq gas pipeline

Based on the reports from Bloomberg, Iraq is said to be ready to invest $ 15 billion in new gas projects that are likely to reduce its dependence on Baghdad – this is gas imports. Baghdad has a plan to achieve self-sufficiency by 2024-2025, while several massive projects are being developed. Along with promoting domestic gas production, Baghdad is going to revive a forgotten gas pipeline project. On April 29, Ihsan Abdul Jabbar, Iraq's Minister of Oil, said that there is an agreement on the import of Syrian gas. A little later, it was clarified that all natural gas will be transported not from Syria, but in transit from Egypt through Syria. The volumes were not specified. The Egyptian representatives of the company were not present when the gas pipeline was discussed. Accordingly, the buyer and the transit country agreed without Egypt.

To overcome the many challenges that may arise from the revival of the Egypt-Syria-Iraq gas pipeline, it will take diplomatic talent to be able to oppose Baghdad to Tehran and at the same time, Washington. Iraq followed a cautious path: 3 days after the announcement, it sent its Energy Minister, Majid Mahdi Hantush, to Tehran with a statement that Iraq would like to continue purchasing Iranian electricity and gas and intends to pay off all its debts. In turn, Iran is going to use these debts, formed over many years by Iraq, as payment for the Sputnik-V vaccine.

In order for gas to flow from Egypt to Iraq, there are a lot of obstacles to be overcome. The first obstacle is that more than the usual political support is needed to restore an old failed project. Back in 2004, the government leaders of Egypt, Syria, Jordan and Lebanon gave their consent to the inclusion of Baghdad in the Arab Gas Pipeline Network (AGP) based on assumptions, and allowed Iraq to export its gas to Europe. However, the civil war, which began in 2011, does not allow for economic recovery.

By implementing the idea of importing gas from Egypt, Iraq will partially free itself from dependence on Iranian electricity, which it has not been able to achieve for several years.

However, the implementation of the revival of the Egypt-Syria-Iraq gas pipeline proved to be a difficult task in the political sense. Syria is under US sanctions, so anything related to this country, even with regard to transit, will most likely require the lifting of sanctions. The problem is that there is an uncertainty that the United States will agree to this.