Habshan oil pipeline to finish ahead of schedule

Abu Dhabi is expected to step up construction of a trans-emirate oil pipeline to finish the project ahead of schedule to ensure free flow of its crude exports following heightened tension in

the region, industry sources said yesterday.

Work on the 360km pipeline, which will link major wells in the oil-rich Habshan area southwest of Abu Dhabi had been scheduled for completion in 2010 but the project could be finished before, sources said.

"The project is crucial for the continuation of Abu Dhabi's oil exports in case of the closure of the Hormuz Strait as the pipeline bypasses that strategic waterway and transports crude oil straight out of the Gulf," a source said. "Such projects cannot afford to be delayed and I believe Abu Dhabi will ask the contractors to hasten its implementation following escalating geo-political tensions. Abu Dhabi cannot afford the interruption of its crude exports for a long time as they constitute the lifeline of its economy."

The 48-inch-diametre pipeline, almost the same length of the Dolphin sub-sea pipeline, which transports natural gas from Qatar to the UAE, will traverse most of the UAE dessert as it will cut across sandy areas east of Abu Dhabi city through Suweihan, passing west of Al Ain and ending in the port of Fujairah just outside the Gulf. It will transport nearly 1.5 million barrels per day of crude oil from Abu Dhabi's main oilfields to Fujairah, where a strategic crude reservoir will be set up. From Fujairah, crude oil will be loaded aboard tankers anchored in safe waters outside the Gulf.

The pipeline will also serve a planned grassroots refinery to be built in Fujairah by the Abu Dhabi-owned International Petroleum Investment Company (IPIC) as part of an investment drive in the UAE and other countries.

The pipeline's capacity accounts for more than 60 per cent of Abu Dhabi's total oil exports although industry sources believe it could be expanded at a later stage.

In December, IPIC awarded the pipes supply contracts worth $460 million (Dh1,689m) to three companies – Sumitomo of Japan, Salzgitter Mannesmann International of Germany and Jindal Group of India. In March, EPC contractor, China Petroleum Engineering and Construction Corporation started work.

The UAE and other Gulf states have long considered bypassing the Hormuz Straits to ensure safe flow of their massive oil exports, most of which pass through the narrow waterway, the only gateway to the Gulf through which nearly 20 per cent of the world's oil supplies pass.

The Gulf plans were prompted by recurrent attacks on shipping during the 1980-88 Iran-Iraq war and threats to close Hormuz, through which hundreds of oil tankers and other vessels pass daily. While part of Saudi's oil exports pass through Hormuz as it has crude terminals outside the Gulf, most of the UAE crude exports and that of other Gulf states flow out of Hormuz. Only Oman is outside Hormuz.


The number

360km: The length of the pipeline, which will carry 1.5m barrels of crude from Abu Dhabi oilfields to Fujairah

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