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Iraq, Saudi Arabia achieve rapprochement

Renewed diplomatic ties could lead to re-starting the oil and gas pipeline between the two countries.

07.01.2015 - Update : 07.01.2015
Iraq, Saudi Arabia achieve rapprochement

By Murat Temizer and Abdelmoneim Haikal

ANKARA 

Iraq and Saudi Arabia, two oil giant countries, have resumed diplomatic ties after a hiatus of 25 years, and the change could mean a start to joint energy projects. 

 "Saudi Arabian officials will visit Baghdad next week to reopen their embassy, and the Iraqi government is gearing up to see a remarkable breakthrough in regional relations," said Saad Al-Hadithi, spokesman for the Iraqi prime minister's office, on Sunday.

Saudi Arabia shut its embassy in Baghdad following Saddam's invasion of their common neighbor Kuwait in 1990.

"It is possible that Saudi Arabia could give up part of its production quota within OPEC to Iraq -- that would not be strange," said Hamda al-Jawahiri, an Iraqi oil expert.

The project for a pipeline between the two countries could also be reinstated, according to al-Jawahiri. The pipeline would enable the export of Iraqi crude through Saudi ports on the Red Sea.

Saudi Arabia commandeered the pipeline in 2001 as compensation for Iraqi debts, and since 2012, the pipeline has been used only for the transport of natural gas to power plants in Saudi Arabia.

The Iraqi Oil Minister Adel Abdul Mahdi has come out in support of the pipeline. "This new situation leads to reconsidering the issue and potentially opening a new export outlet for Iraq," he said in November.

The Saudi-Iraqi pipeline carried one million barrels per day in the past and the condition of the pipeline has not changed significantly, according to experts. It is expected to be in good working condition. 

 "Improved relations between Riyadh and Baghdad will be reflected positively in their coordination within OPEC. However, I do not think that the current improvement in relations between the two countries is linked to the situation of the oil markets," said Naser al-Tamimi, a U.K.-based Middle East analyst.

He added that the rapprochement is still in its infancy and may stumble at any time, especially as Saudi-Iranian relations, or issues in Syria, could affect the new relationship. 

"Most importantly, if oil prices remain low for a long time, this in turn could increase the tension between Iraq and the Gulf States, and Saudi Arabia in particular, as the economic situation in Iraq is so dire. However, at the moment it seems the two countries agree to cooperate on the pressing issue of confronting their common enemy which is the Islamic State of Iraq and the Levant and addressing other issues later," he said.

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