Abu Dhabi completes oil pipeline

Abu Dhabi has completed a pipeline that will cut across much of the UAE’s barren desert to transport massive quantities of crude from its oilfields straight to the Indian Ocean, according to the project operators.

Oil will begin to flow on a trial basis in December before the project is fully commissioned to allow Abu Dhabi to bypass the risky Hormuz Strait through which nearly a fifth of the world’s crude exports pass every day.

“We have completed the project and crude will be pumped through the pipeline on a trial basis next month,” said Khadem Al Qubaisi, Managing Director of the government-owned International Petroleum Investment Company (Ipic).

“The contracting company has finished all stages of the project, which involves a 400-km pipeline linking Habshan area to transport 1.5 million barrels per day of crude oil to the eastern coast of the UAE.”

Ipic, Abu Dhabi government’s overseas oil investment arm, launched the pipeline project two years ago and officials estimated its cost at around Dh12 billion, one of the largest pipeline ventures in the Middle East.

The pipeline originates from Habshan, the collection centre for the bulk of Abu Dhabi's onshore oil output of more than half its total output.

"It is also intended to develop a reliable oil export capability on the eastern seaboard of the UAE that can accommodate larger vessels due to relatively deep waters that Fujairah affords on the Gulf of Oman."

Ipic, which is managing the project, said the 48-inch diameter pipeline would originate from Habshan, the collection centre for the bulk of Abu Dhabi's onshore crude oil production of more than half its total output.

Abu Dhabi Government's hydrocarbon investment arm, said the 370km pipeline would transport nearly 1.5 million barrels per day of Murban crude from the emirate's main onshore oil facilities when it is commissioned in early 2010.

"The pipeline is designed to offset the reliance on oil terminals in the Arabian Gulf and to reduce shipping congestion through the Strait of Hormuz," Ipic said in a statement on its website, which was launched this week.

The crude, Murban blend, will be carried through a single 48-inch diameter pipeline. The project comprises the pipeline, main oil terminal at Fujairah, offshore loading facilities and other associated facilities.

The pipeline, exceeding the length of the Dolphin subsea pipeline that transports natural gas from Qatar to the UAE, traverses sandy areas east of Abu Dhabi city through Suweihan and passes west of the oasis town of Al Ain.

A strategic crude reservoir is being set up in Fujairah. From there, crude oil will be loaded aboard tankers anchored in safe waters.

The pipeline will also serve a planned refinery to be built in Fujairah by IPIC within its ongoing investment drive in the UAE and other countries.

In late 2008, Ipic awarded the pipes supply contracts worth around $460 million (Dh1.69 billion) to three companies: Sumitomo of Japan, Salzgitter Mannesmann International of Germany and Jindal Group of India.
In March 2009, the EPC contractor, China Petroleum Engineering and Construction Corporation, started construction work.

The UAE and other Gulf states have long considered bypassing the strategic Hormuz Strait to ensure safe flow of their massive crude oil exports, most of which pass through the narrow waterway, the only gateway to the Gulf.

The Gulf plans were prompted by recurrent attacks on shipping during the 1980-1988 Iran-Iraq war and threats to close Hormuz, through which hundreds of oil tankers and other vessels pass daily.

While part of Saudi Arabia's oil exports pass through Hormuz as it has terminals outside the Gulf, almost all crude exports by the UAE and other Gulf countries flow out of Hormuz. Oman is the only Gulf nation located outside Hormuz.

Iran has again threatened to block Hormuz if it is attacked by the US over its nuclear programme and industry sources believe such threats would revive Gulf pipeline plans.

Abu Dhabi, the UAE’s main oil producer which controls over 90 per cent of the country’s crude reserves, exports more than two million bpd of oil and nearly seven million tonnes of liquefied natural gas per year.

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