Alternative to strait oil route

26 May 2010

Abu Dhabi’s pipeline to Fujairah exposes Qatar’s liquefied natural gas transport weaknesses

This month the West ratcheted up the pressure on Iran to halt its nuclear power programme, and proposals for a fourth set of UN sanctions are now being circulated among the 15-member Security Council. For some, the move makes the prospects of a military confrontation more likely.

The Islamic Republic has made no secret that, should it come under attack, it would respond by blocking the strategic Strait of Hormuz, through which some 40 per cent of the world’s seaborne crude oil passes.

But Abu Dhabi has been preparing for this eventuality for some time, and later this year a 375-kilometre-long oil pipeline running from its Habshan refinery to Fujairah will be commissioned.

Fujairah is the only emirate in the UAE not to border the Gulf, so ships leaving from its port do not need to pass the Strait of Hormuz.

At a cost of $3bn, the pipeline is an expensive insurance policy. But it is means Abu Dhabi will be able to continue exporting oil in the event of the strait being blocked.

With Abu Dhabi’s exports secured, Qatar’s vulnerability comes to the fore. The gas-rich state has invested billions of dollars to become the world’s largest liquefied natural gas producer, but its exports cannot be delivered if the Strait of Hormuz is blocked off.

The idea of gas pipelines from Qatar to its customers is not new, but perhaps its time for Doha to give it more serious consideration.

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