Last updated: 3 July, 2012

UAE pipeline bypassing Hormuz to fully operate in August

A pipeline the UAE is building to pump oil from east coast terminals and bypass the Iran-threatened Strait of Hormuz will be fully operational in August, an Abu Dhabi oil official said Tuesday.

The Habshan-Fujairah pipeline, which will carry oil from fields in Abu Dhabi on the Gulf to Fujairah on the Gulf of Oman, is “approaching the phase of continuous operation,” said Ali Jarwan, CEO of oil and gas producer, Abu Dhabi Marine Operating Co ADMA-OPCO.

“We expect that by August we’ll have regular flow of oil,” Jarwan said at the Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC).

In late May, Fujairah ruler Sheikh Hamad bin Mohammed Al-Sharqi told AFP the pipeline would start operating in June.

Construction of the 360-kilometre (225 mile) pipeline began in 2008.

According to Sheikh Hamad, the pipeline will have an initial capacity of 1.5 million barrels per day rising to 1.8 million bpd, which represents the bulk of the UAE’s current production of around 2.5 million bpd.

Fears of a closure of the Strait of Hormuz intensified earlier this year after Iran threatened to close the strategic outlet from the Gulf if Western governments kept up their efforts to choke off its oil exports in a bid to rein in its controversial nuclear programme.

Reports in Iranian media on Monday said Iranian MPs endorsed a bill banning Europe-bound tankers from using the Strait of Hormuz to punish EU nations that slapped sanctions on Iran.

An EU embargo on Iranian oil went into effect on Sunday, provoking anger in Tehran, which says the measure will hurt talks with world powers over its sensitive nuclear activities.

In addition to the exports of the UAE and Iran itself, all the oil exports of Bahrain, Kuwait and Qatar are shipped through the waterway. Iraq also pumps the bulk of its exports through ports on the Gulf.

Saudi Arabia, the world’s largest oil exporter, pumps most of its crude from its terminals on the Gulf but it can divert large supplies to terminals on the Red Sea.