Oil pipelines to sidestep Hormuz

Plans for two pipelines to transport oil across the UAE, avoiding possible Strait of Hormuz blocks by Iran, are still under consideration.
Oil pipelines to sidestep Hormuz
By Safura Rahimi
Wed 21 Mar 2007 02:33 PM

GCC countries are still considering oil pipeline plans that would avoid the Strait of Hormuz and possible interference in global oil shipments from Iran, according to reports.

The Strait of Hormuz - the narrow channel at the entrance of the Gulf located between Oman and Iran - ships around 40 per cent of the world's oil supply.

Iran has previously threatened to disrupt supplies if it comes under attack for its nuclear policy.

The GCC is considering two pipelines - capable of pumping 6.5 million barrels per day - that would cross the UAE and eliminate the need to export oil along the Strait of Hormuz.

ArabianBusiness.com

in January reported on


initial plans

for the pipeline, involving the construction of a 360km, 48-inch diameter pipeline with a capacity of transporting 1.5 million barrels per day (bpd) of crude from Habshan in Abu Dhabi to Fujairah.

The pipeline would allow Abu Dhabi to continue exporting oil despite possible escalations in tensions between Iran and the international community.

According to an AP report quoted in Gulf Times, Abu Dhabi's International Petroleum Investment Co. is planning to build the first line, which would carry 1.5 million bpd of crude oil, about 55 per cent of the Emirates' production.

A second, more ambitious line carrying some 5 million barrels a day is still under discussion and could take a decade to build, while construction of the smaller first line is set to start this year, AP reported.

According to the Gulf Times report, bypassing the Strait of Hormuz could also lead to a drop in the price of crude, as traders would be reassured over the stability of exports, prompting them to knock down the premium.

Ministers from the six Gulf Arab countries are scheduled to discuss the pipeline during one of two summits planned this year.

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