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Habshan-Fujairah oil pipeline 'will be ready within six months'

Al Bhatti

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January 10, 2012

Habshan-Fujairah oil pipeline 'will be ready within six months'

Development will give Abu Dhabi direct access to Indian Ocean

An oil export pipeline from Habshan in Abu Dhabi to Fujairah that will bypass the strategic Strait of Hormuz will be ready by the middle of 2012, the UAE Minister for Energy Mohammad Bin Dha'en Al Hameli said yesterday.

"The pipeline is almost complete, hopefully it will be operational within six months, by May, June," Al Hameli told reporters on the sidelines of an energy conference in Abu Dhabi.

The commissioning of the $3.3 billion (Dh12.11 billion), 370 kilometre Habshan-Fujairah pipeline will take place within a month, a top-ranking oil industry source told Gulf News on Sunday.

"The pipeline will be ready to export crude oil a few months down the line, post-commissioning," said the source.

The commissioning of the 1.5 million-barrel-per day pipeline was scheduled to take place late last year. However, delays in material deliveries and construction-related issues pushed the deadline back, the source added.

"There is delay; it is a lot of work. It is not only construction of the project but it also has to be filled," said Al Hameli, adding that the capacity of the pipeline could go up to 1.8 million barrels per day.

The commissioning of the pipeline will be a game changer in crude oil transportation as it will give Abu Dhabi direct access to the Indian Ocean for its oil exports and the option of bypassing the critical Strait of Hormuz. Abu Dhabi would get access to an open sea — that's the strategic advantage the new pipeline provides.

Safe passage

The new pipeline will ensure safe flow of the UAE's crude oil exports in the event of any disturbance in the Strait of Hormuz, which Iran has been threatening to close due to mounting tensions with the West over its controversial nuclear programme.

The US and its allies in Europe have been saying Iran's nuclear programme is aimed at building nuclear weapons and have threatened to impose an embargo on Iran's oil exports.

Iran denies the charge, saying its nuclear programme is meant for peaceful purposes and if its oil exports are threatened, it will close the Strait of Hormuz.

According to experts, the new pipeline will also lower shipping costs for the UAE's oil exports, as shippers charge a premium due to the war risk for entering the Gulf. The conceptual design of the pipeline was completed in 2006 and the construction related contracts were awarded in 2007. Construction started on March 19, 2008.

The pipeline is designed by WorleyParsons. Construction is managed by ILF Consulting Engineers and carried out by China Petroleum Engineering and Construction Corporation.

During the first year of operation, the pipeline will enable the Abu Dhabi Company for Onshore Oil Operations (Adco) to export roughly half its total production.

The Habshan-Fujairah pipeline is owned by the International Petroleum Investment Company, an investment arm of the government of Abu Dhabi.

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

Under the plan, a strategic crude reservoir will be set up in Fujairah. The pipeline will also serve a planned refinery to be built in Fujairah by IPIC.

gulfnews : Habshan-Fujairah oil pipeline 'will be ready within six months'
 
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Smart move by the UAE, actually all the GCC have no problem if strait of hormuz gets closed (which will never happen any way) , they can export through the red sea and the Arab sea with out any problem using pipelines.....if strait of hurmoz gets closed it will doom iran only and not any one else, because unlike others they have no alternatives routes.
 
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Right on time

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June 22, 2012

Dh10b Habshan-Fujairah pipeline begins oil exports

Pipeline reduces dependency on Straits of Hormuz, reduces shipping costs, secures safe transport of exports

The new Dh10 billion Habshan-Fujairah pipeline saw crude oil exports begin yesterday in Abu Dhabi, bypassing the Straits of Hormuz — a politically and economically strategic move for the UAE, experts said.

About 30 per cent of the UAE’s crude oil was exported through the pipeline from Abu Dhabi yesterday but this is expected to increase to 50 per cent or one million barrels a day by July 1, Dr. Numan Ashour, A UAE based economist, told Gulf News.

The pipeline ends the UAE’s total dependence on the vital Gulf shipping artery which Iran has threatened to block as Western sanctions on its oil exports have tightened.

It will secure safe transportation of the UAE’s oil exports, cut insurance costs and guarantee uninterrupted oil revenue flowing into the country in the face of Iranian threats or in case of war, analysts said.

“It is significant first because it reduces reliance on a troubled Hormuz and gives the UAE the chance to continue a major part of its exports unimpeded. Secondly, it will contribute to making Fujairah a major oil terminal as it will pull additional storage and handling projects and a well- sophisticated refinery in the near future,” Saadallah Al Fathi, former head of the Energy Studies Department in Opec Secretariat in Vienna, said in an email to Gulf News.

The pipeline is likely to reduce the UAE’s transport costs, said Ashour.

“The 360-km pipeline with a single 48-inch diameter also reduces shipping costs for the UAE’s oil exports because shippers charge a insurance premiums based on war risk for entering the Gulf Waters,” he said.

Other Gulf Opec producers Kuwait and Qatar will continue to rely on shipping through the Strait to export fuel amid escalating tensions in the region.

Politically, the pipeline is a strategic asset to the UAE.

“It will show Iran that the countries of the region will not take its threats lightly and that they have the means to reduce the damage if ever it occurs. It is also an invitation to Iran to follow a cooperative policy rather than force other countries into expensive means to deny Iran the possibility of threatening their exports,” said Al Fathi.

gulfnews : Dh10b Habshan-Fujairah pipeline begins oil exports

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June 22, 2012

Pipeline to secure UAE’s oil exports, reduce transport costs

Pipelines devalues Iranian threats to close Straits of Hormuz

Exporting oil through the new Habshan-Fujairah pipeline will secure safe transportation of the UAE’s oil exports, cut insurance costs and reduce its dependence on the Straits of Hormuz, analysts told Gulf News.

The investment is an economically and politically strategic move for the UAE, they said.

“From the UAE’s perspective, this will help it to secure its most strategic economic asset against political tensions with Iran,” said Said Hirsh, analyst at London-based Capital Economics. “The pipeline is very good from the perspective of the international community as at least one step to help ease rising supply concerns from the dependence on the Strait of Hormuz.”

The UAE will be able to transport its oil exports safely in the face of Iranian threats to close the Straits of Hormuz or in case of war, said Dr. Mohammad Al Asoomi, a UAE-based economist. “The exports will not stop and therefore they can guarantee continued oil revenues.”

The pipeline could help reduce transport costs as insurance premiums within the GCC can fall by up to 25 percent, he added. Insurance, which is factored in transport costs, may drop as the risk premium falls.

Given the massive investment in Fujairah, the project is one way to balance economic development in different emirates and generate employment opportunities, Al Asoomi added. “The pipeline will support the spread of economic development in different parts of the country, not just exclusive to certain emirates, and this is very important for sustainable development in the UAE.”

Politically, the new pipeline means that the UAE is no longer dependent on the troubled Straits of Hormuz, where regional tensions have been churning amid Iranian threats to close the strategic passageway, analysts say.

“It will show Iran that the countries of the region will not take its threats lightly and that they have the means to reduce the damage if ever it occurs. It is also an invitation to Iran to follow a cooperative policy rather than force other countries into expensive means to deny Iran the possibility of threatening their exports,” Saadallah Al Fathi, former head of the Energy Studies Department in Opec Secretariat in Vienna, said in an email to Gulf News.

The presence of the pipeline dilutes Iranian threats to close off the Straits.

“It de-risks the whole fall-out quite a bit. It’s not like a shut down of the straits would not be a problem but this helps. It weakens Iran’s hold on the use of that threat and devalues it somewhat,” said Samuel Ciszuk, an oil supply consultant at KBC Energy Economics. “Iran is one of the few remaining countries that’s entirely dependent on transporting crude oil through the Straits, so that leaves Iran, Kuwait and Qatar to be exposed to the shut down of the straits.”

The new development however is unlikely to lead to a further drop in oil prices, which mainly depend supply and demand as well as speculation, analysts said.

However, it may worsen UAE-Iran relations, some analysts said.

“I think Iran will blame itself for forcing the UAE to seek other options in the face of its threats. Iran may consider the pipeline against its interests because it reduces the effectiveness of its threats. The pipeline will not contribute positively to the already strained relations between the two countries,” according to Al Fathi.

On the other hand, a “deep, fundamental mistrust” has existed for decades between the two countries, relations took a “sour turn” over the Abu Musa islands dispute and Abu Dhabi has been planning this pipeline for a long time, so relations are unlikely to be affected further, said Ciszuk.

gulfnews : Pipeline to secure UAE
 
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good news, making straight of Hormuz only important for iran.
 
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