UAE to bypass Hormuz with new pipeline project

The United Arab Emirates (UAE) could soon start pumping oil via a key pipeline that will allow it to bypass the Straits of Hormuz and protect exports if Western powers resort to military action in a row over Iran’s nuclear program.

The Abu Dhabi Crude Oil Pipeline (ADCOP) project, a 480-km pipeline with a capacity of up to 2.5 million barrels per day (bpd) will allow the UAE to boost exports from its Fujairah terminal outside the Straits and on the Gulf of Oman, four industry sources told Reuters.

“There’s a hurry to get this operational as the noises about an attack on Iran gets louder,” an industry source said. “Oil could flow through the pipeline from end-December initially at 1 million bpd and gradually increase to 2 million bpd.”

Crucial channel

Tension over Iran’s nuclear program has increased since the International Atomic Energy Agency (IAEA) reported on Nov. 8 that Tehran appears to have worked on designing a nuclear bomb.

The Strait of Hormuz is the most important oil transit channel in the world, with some 15.5 million barrels or about a third of all sea-borne oil passing through in 2009.

Even though some analysts believe an imminent military action against Iran rather unlikely, they think the pipeline is crucial for the sustainability of oil exports with political tensions in the region on the rise.

“It is opening up an export channel that is invulnerable to any disruption in Hormuz,” oil and gas analyst Saket Vemprala at Business Monitor International said.

“I don’t think the military action scenario is likely anytime soon but such routes are useful for the Gulf states. If you remember, the Iraqi crude pipeline through Saudi Arabia was very important during the Iran-Iraq war.”