Fujairah oil pipeline to flow in August

A pipeline that will carry the bulk of Abu Dhabi's crude to the port of Fujairah - bypassing the strategically sensitive Strait of Hormuz - will be operational in August, a senior Abu Dhabi National Oil Company official said.

The pipeline would carry the bulk of Abu Dhabi's crude to the port of Fujairah. AP Photo

A pipeline that will carry the bulk of Abu Dhabi's crude to the port of Fujairah - bypassing the strategically sensitive Strait of Hormuz - will be operational in August, a senior Abu Dhabi National Oil Company (Adnoc) official said.

Known as the Abu Dhabi Crude Oil Pipeline, the US$3.3 billion (Dh12.12bn) structure was originally slated for completion in 2010.

A day before Abu Dhabi celebrates its first shipment of crude oil 50 years ago, the head of the emirate's offshore production company said yesterday that the alternative route would soon be open. "Within July they will be in the commissioning phase," said Ali Al Jarwan, the chief executive of Abu Dhabi Marine Operating Company, one of Adnoc's offshore subsidiaries. "We expect that by August we'll have regular flow of oil."

The pipeline's initial capacity will be 1.5 million barrels per day (bpd), with a maximum capacity of 1.8 million bpd.

The pipeline is owned by International Petroleum Investment Company (Ipic) a government investment fund that is also studying the feasibility of a refinery in Fujairah.

Ipic awarded the engineering, procurement and construction contract for the project to the construction arm of China National Petroleum Corporation in March 2008.

In November 2010, the investor announced that the structure had been completed, but the pipeline remained idle.

In January, Mohammed Al Hamli, the UAE Minister of Energy, said that the 370-kilometre pipeline was a further six months from completion.

Then media reports late last month suggested that the Abu Dhabi Crude Oil Pipeline would deliver the first crude for tanker export on Monday, the same day a European Union embargo and sanctions on Iranian crude exports came into effect.

The pipeline's strategic purpose lies in its ability to channel all 1.4 millions bpd of crude from Abu Dhabi's onshore fields to the Fujairah export hub outside the Arabian Gulf, thus bypassing the Strait of Hormuz. Iran has threatened to block the waterway in response to western pressure over its nuclear programme.

Mr Al Jarwan rejected the suggestion that the pipeline would be used to transport crude from neighbouring Gulf countries past the Strait of Hormuz, a 16km-wide bottleneck through which an average of 17 million barrels of crude pass every day

"For the time being it will be for [Abu Dhabi's] onshore oil. There is a potential to have offshore oil from Abu Dhabi to ensure that there is full capacity of the pipeline. But there is no reason because the capacity is sufficient," he said.

The pipeline is part of a massive investment by Abu Dhabi into its oil and gas infrastructure. The emirate plans to increase its crude production capacity from its present 2.7 million bpd to 3.5 million bpd, and is also investing heavily to increase its production of natural gas. Added gas is vital to meet the demand for electricity in Abu Dhabi and the Northern Emirates, and to supply a growing industrial base.

Demand for natural gas in Abu Dhabi was growing at a hefty 15 per cent per annum, Mohammed Al Suwaidi, the chief executive of Gasco, said yesterday.

To enable this growth, Adnoc has committed to investing $40bn over a four-year period that began in 2010. Of that amount, $25bn would be spent on expanding the gas supply, said Mr Al Suwaidi.

The efforts to boost production will open the door to new players into Abu Dhabi's hydrocarbon sector.

"The trend for marginal oil and gas fields - there is consideration to have newcomers," said Mr Al Jarwan.

Adnoc last month awarded Germany's Wintershall and Austria's OMV the rights to appraise a sour-gas field near Shuwaihat in Abu Dhabi.

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