Ipic Fujairah pipeline to ensure reliable exports

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Abu Dhabi said yesterday its plan to construct a pipeline traversing most of its desert to Fujairah is intended to ensure reliable crude exports to the world.

The International Petroleum Investment Company (Ipic)International Petroleum Investment Company (Ipic), Abu Dhabi Government's hydrocarbon investment arm, said the 370km pipeline would transport nearly 1.5 million barrels per day of Murban crude from the emirate's main onshore oil facilities when it is commissioned in early 2010.

"The pipeline is designed to offset the reliance on oil terminals in the Arabian Gulf and to reduce shipping congestion through the Strait of Hormuz," Ipic said in a statement on its website, which was launched this week.

"It is also intended to develop a reliable oil export capability on the eastern seaboard of the UAE that can accommodate larger vessels due to relatively deep waters that Fujairah affords on the Gulf of Oman."

Ipic, which is managing the project, said the 48-inch diameter pipeline would originate from Habshan, the collection centre for the bulk of Abu Dhabi's onshore crude oil production of more than half its total output.

"The pipeline will terminate at Fujairah. It has been designed for transporting 1.5 million bpd of crude oil from ADCOADCO facilities at Habshan to an oil terminal in Fujairah for export through offshore loading facilities," it said.

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

The pipeline, almost the same length as the Dolphin subsea pipeline that transports natural gas from Qatar to the UAE, will traverse most of the UAE desert as it will cut across east of Abu Dhabi city through Suweihan, passing west of Al Ain and ending in the port of Fujairah just outside the Gulf. A strategic crude reservoir will be set up in Fujairah. From there, crude oil will be loaded aboard tankers anchored in safe waters.

The pipeline will also serve a planned refinery to be built in Fujairah by Ipic within its ongoing investment drive in the UAE and other countries.

In December, Ipic awarded the pipes supply contracts worth $460 million (Dh1.69 billion) to three companies: Sumitomo of Japan, Salzgitter Mannesmann International of Germany and Jindal Group of India. In March, the EPC contractor, China Petroleum Engineering and Construction Corporation, started construction work.

The UAE and other Gulf states have long considered bypassing the strategic Hormuz Strait to ensure safe flow of their massive crude oil exports, most of which pass through the narrow waterway, the only gateway to the Gulf through which nearly 20 per cent of the world's oil supplies pass. The Gulf plans were prompted by recurrent attacks on shipping during the 1980-1988 Iran-Iraq war and threats to close Hormuz, through which hundreds of oil tankers and other vessels pass daily. While part of Saudi Arabia's oil exports pass through Hormuz as it has crude terminals outside the Gulf, almost all crude exports by the UAE and other Gulf states flow out of Hormuz. Oman is the only Gulf nation located outside Hormuz.

Iran has threatened to block the Strait of Hormuz in case it is attacked by the US and industry sources believe such threats would revive Gulf pipeline plans.

By Nadim Kawach

© Emirates Business 24/7 2008