Friday, June 8, 2012

The UAE Is Nearing Completion of a New Oil Pipeline...

. . . that allows it to avoid having to ship its oil through the Straits of Hormuz. (Full story here).
The United Arab Emirates is nearing completion of a pipeline through the mountainous sheikdom that will allow it to reroute the bulk of its oil exports around the Strait of Hormuz at the mouth of the Gulf, the path for a fifth of the world's oil supply.

Iran has repeatedly threatened to close the strategically sensitive waterway, which is patrolled by Iranian and U.S. warships, in retaliation for ramped-up Western sanctions over Tehran's nuclear ambitions.

That threat has raised worries among Gulf countries that conflicts could block the route to market for their most lucrative resource. But only the UAE and Oman have coastlines on Indian Ocean side of the strait that would enable them to go around the chokepoint by land. Saudi Arabia also can avoid Hormuz by shipping its Gulf fields' oil production out of its Red Sea ports, but it would have to increase the capacity of those ports and of pipelines running across the breadth of the country to handle its total output.

With the Emirates' new pipeline, oil from fields deep in the Abu Dhabi desert would travel 236 miles (380 kilometers) overland and across the barren Hajar mountains to this fast-growing port on edge of the Indian Ocean.

At the moment, Emirati oil exports are loaded in the Gulf and must pass through Hormuz. Once it's running at full volume, the pipeline will let the UAE get two-thirds of its peak oil production to market even if the strait is shut. That's about 10 percent of the total 17 million barrels of oil a day that currently goes through Hormuz.

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