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Habshan-Fujairah oil pipeline.

Location : Fujairah, UAE

Details : Abu Dhabi, the UAE's largest oil producingemirate will have a direct access to the Indian Ocean for its oil exports and the option of bypassing the critical Strait of Hormuz when it becomes a game changer in crude oil transportation for the commissioning of the Dh 12.11 billion ($3.3-billion) Habshan-Fujairah oil pipeline this year.

The new pipeline mitigates the continuing problem of shipping crude and clean products through the Hormuz Strait, especially as the political situation vis-a-vis Iran and the rest of the world is likely to deteriorate. It will lead to the promised and often delayed expansion of Fujairah port facilities and refining capacity.

The Strait of Hormuz handles 40 per cent of the world's seaborne oil. The new pipeline will ensure safe flow of the UAE's crude oil exports in the event of any disturbance in the Strait of Hormuz, which Iran last year threatened to choke if Western powers resorted to military action in the context of the row over Tehran's nuclear program.

Abu Dhabi's onshore crude output for export is loaded at the Jebel Dhanna port, while its offshore crude is loaded for export at Das Island. It controls more than 90 per cent of the UAE's crude oil reserves and exports more than 2 million barrels of oil per day.

The 370-km pipeline, expected to be commissioned in the fourth quarter of this year, will carry around 1.5 million barrels per day of crude oil from the onshore Habshan field to the port of Fujairah.

The conceptual design of the pipeline was completed in 2006 by WorleyParsons and the construction related contracts were awarded in 2007. Construction of the pipeline started on March 19, 2008 carried out by China Petroleum Engineering and Construction, and is managed by ILF Consulting Engineers. The project comprises the pipeline, main oil terminal at Fujairah, offshore loading facilities and other associated facilities.

The new pipeline will lower shipping costs for the UAE's oil exports, as shippers charge a premium due to the war risk for entering the Strait of Hormuz. During the first year of its operation, the pipeline will enable the Abu Dhabi Company for Onshore Oil Operations (Adco) to export roughly half its total production. The International Petroleum Investment Company (IPIC), an investment arm of the government of Abu Dhabi owns the Habshan-Fujairah crude oil pipeline.

The crude, Murban blend, will be carried through a single 48-inch dia pipeline. Under the plan, a strategic crude reservoir will be set up in Fujairah. From there, crude oil will be loaded aboard tankers anchored in safe waters. With this in mind, the port of Fujairah will only grow in strategic and commercial importance.

Contact Details:

International Petroleum Investment Company (IPIC),

PO Box 7528, Abu Dhabi, UAE

Phone: +9712 633 6555, 419 2000

Fax: +9712 633 0111, 677 7717


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Publication:Saudi Economic Survey
Geographic Code:7UNIT
Date:Jun 29, 2011
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