In a move to counter Iran’s geo-political threat to disrupt oil exports through the vulnerable Straits of Hormuz in the event of a military conflict between Iran and the West, the UAE began pumping crude oil for export in July 2012 through a new overland pipeline that bypasses the Straits. The 380 km (236 mi.) pipeline originates in Abu Dhabi and snakes over the Hajar mountains to the emirate of Fujairah on the UAE’s Indian Ocean coast, south of the Straits.
An estimated 20% of the world’s seaborne crude oil supply passed through the narrow channel that connects the Arabian Gulf (called Persian Gulf by Iran) to the Gulf of Oman prior to the opening of the new pipeline. Shipping traffic approximated 30 loaded tankers carrying 15-17 million bbl/day. An estimated 75% of that quantity is destined for Asian markets.
According to reports, the new 48 in. diameter pipeline is capable of handling 1.5 million bbl/day, although capacity is expected to eventually rise to 1.8 million bbl/day. In addition to potentially decreasing shipping traffic through the Straits of Hormuz choke point by approximately 40%, the safeguard measure has allowed the UAE to redirect 70% of its total crude oil exports and reduce shipping costs as insurance companies charge a premium due to war risk for entering the Gulf.
The pipeline, constructed by China Petroleum Engineering and Construction Corp., required 4 years and 3 months to complete.
Pick up the book STAYING AFLOAT – Three Years in Abu Dhabi to acquire a colorful and comprehensive account of my experience as an American expat while working and living in wealthy Abu Dhabi.