Persian Gulf producers are looking at building oil pipelines that would bypass the world's most vulnerable energy choke point, the Strait of Hormuz, in a move that would avoid possible Iranian threats to global oil shipments.
If built, two pipelines could ferry as much as 6.5 million barrels of oil per day around the strait, an amount equal to almost 40% of the daily exports currently shipped through the narrow channel at the entrance of the Gulf, an Associated Press report said.
Construction of the first, smaller line is forecast to begin this year, the Dubai branch of Britain's Standard Chartered Bank reported this week.
A second, more ambitious line carrying 5 million bpd is still under discussion and could take a decade to build.
The idea of the new pipelines among traders is popular, Mustafa Alani, a security analyst for the Dubai-based Gulf Research Centre, told AP.
"Crisis after crisis is threatening stability. We need a permanent solution. Any threat, real or imaginary, will increase the price a dollar or two. This project will give a new boost to the stability of oil,'' he said.
Currently, oil from the region is loaded onto tankers in the Gulf and shipped through the strait. The pipeline plans aim to take the oil by land from Arab countries to just outside Hormuz for loading.
The first, 360 kilometre pipeline would carry only oil from the United Arab Emirates, extending from the country's Habshan oilfield, across a mountain range, to the emirate of Fujairah, located outside the strait on the Gulf of Oman.
Abu Dhabi's International Petroleum Investment Company is planning to build the line, which would carry 1.5 million bpd.
The second line, dubbed the Trans-Gulf Strategic Pipeline, would bring as much as 5 million bpd from various Persian Gulf terminals to a newly built export terminal outside the straits, perhaps in Oman.
A forthcoming Gulf Research Centre study suggests six possible routes for the trans-Gulf pipeline, which could bring oil from as far north as Iraq, passing through Kuwait, Saudi Arabia and the UAE to the Omani capital of Muscat on the Arabian Sea, Alani said. Other possible routes could see the pipeline terminating in Yemen or Fujairah.
The trans-Gulf pipeline could strect more than 1400 kilometres, with large sections of the link being underground to protect it from terrorist attack.
Ministers from the six Gulf Arab countries are scheduled to discuss the pipeline during one of two summits planned this year.
© Upstream 2007
