'Fujairah oil pipeline may be ready this year'

A pipeline that will cut across much of the UAE desert to transport crude from Abu Dhabi’s massive oilfields straight to the Indian Ocean could be completed this year, the country’s Energy Minister has said.

Mohammed bin Dhaen Al Hamili said the project cost nearly $3.3 billion (Dh12bn) and would carry around 1.5 million barrels per day of crude oil from the onshore Habshan field to the port of Fujairah outside the Gulf to bypass the narrow Hormuz Strait, which Iran has threatened to shut.

“While the UAE is confident the Strait will remain open to tankers, the purpose of the pipeline is to really not put too much pressure on the ships coming into the Gulf,” Al Hamili was quoted as saying yesterday by Bloomberg new agency.

The Government-owned Abu Dhabi Petroleum Investment Company (Ipic) is undertaking the project, one of the largest crude pipeline ventures in the region.

In a statement last year, Ipic said  the pipeline would transport 'Murban' crude from the emirate's onshore oil facilities when it is commissioned.

"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," it said.

"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."

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

"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 370-kilometre pipeline, almost the same length as the Dolphin subsea pipeline that transports natural gas from Qatar to the UAE, will traverse sandy areas east of Abu Dhabi city through Suweihan and passing west of Al Ain.

A strategic crude reservoir will be 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 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 1980-1988 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 more than 90 per cent of the country’s crude reserves, exports more than two million bpd of oil and nearly seven million tones of liquefied natural gas. 
 

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