Friday, July 20, 2012

UAE opens export terminal outside Hormuz

As Iranian threats to close the Strait of Hormuz grew last weekend, the United Arab Emirates loaded its first cargo on Sunday from its new oil export terminal at Fujairah.

UAE oil officials and executives from oil majors, including ExxonMobil, Shell and Total, witnessed the opening of an alternative route for up to 75% of UAE’s oil exports, reported Reuters.

A European Union ban on Iranian crude imports came into effect on 1st July and Iran has been intensifying its threats to disrupt oil shipments from the Gulf. Two Iranian military officials warned over the weekend that Iran could stop oil from sailing through the Strait.

Alarmed by the Iranian threats, the UAE has completed its long-delayed project to pump up to 1.8 mill barrels per day to an export terminal at Fujairah.

Over the next few months, the Gulf OPEC member hopes to increase exports from the new facility to around 1.5 mill barrels per day, nearly two-thirds of the 2.4 mill it typically exports each day and the new pipeline could carry three-quarters of the UAE’s oil exports if needed, Reuters reported.

“This is a very strategic project, it gives the options to our clients to transport larger quantities (of oil),”UAE’s oil minister Mohammed bin Dhaen al-Hamli said. “I consider this project to be complementary, so we have an alternative…to give us choice to have more than one trade route.”

The 370-km Abu Dhabi Crude Oil Pipeline carries oil from fields in the UAE’s western desert to Fujairah. As well as the export terminal, the facility also has eight crude oil storage tanks each with a capacity of one million barrels.

The first cargo was loaded last Sunday with oil pumped from western fields in Abu Dhabi across to be shipped from Fujairah to Pakistan. The bulk of UAE’s oil is exported to Asia.

“It will make other projects viable in this area, and will also avoid more insurance and also will give access to the open sea,” Abdulla Nasser Al Suwaidi, the head of state-run Abu Dhabi National Oil Co (ADNOC) said after the opening ceremony.

In addition, Saudi Arabia has opened a bypass in the last few months, giving Riyadh scope to export more of its crude from Red Sea terminals should Iran try to block the Strait of Hormuz, but other Gulf oil exporters remain dependent on it, Reuters said.

Tanker transits through the Strait last year accounted for about 35% of all sea-borne traded oil, or almost 20% of oil traded worldwide.

Almost 17 mill barrels of oil were shipped between the northern tip of Oman and the southern coast of Iran in 2011, according to the US Energy Information Administration.

Abu Dhabi government-owned International Petroleum Investment Company (IPIC) undertook the pipeline project and ADNOC’s onshore unit ADCO is the operator.

IPIC is also planning to build a $3 bill refinery at Fujairah with a capacity of 200,000 barrels per day, due to be completed in mid-2016, Reuters said.

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