A new oil pipeline that bypasses the Strait of Hormuz and was opened in July last year is still operating at limited capacity, people familiar with the matter said on Sunday.
Most cargoes are still being shipped from Abu Dhabi’s Jebel Dhanna oil terminal, a person familiar with the matter said, declining to say when the Fujairah pipeline will become fully operational.
In November, UAE’ energy minister Mohammad Bin Dha’en Al Hamili said the pipeline, which can transport 1.5 million barrels a day of crude, will be fully operational by the end of 2012 or the first quarter of this year.
News last year that the route was getting close to operating provided some relief to oil markets rattled by Iranian threats to block the Strait, through which one-fifth of the world’s oil is currently shipped.
The 400-kilometre link, which costs around $4 billion, will enable Abu Dhabi to export as much as 75 per cent of its crude at periodic intervals from Fujairah, located outside the Gulf on the Gulf of Oman, where tankers will be able to pick up the oil instead of sailing into the Gulf via the Strait of Hormuz, the narrow waterway watched over by Iran.
It is known as Abu Dhabi Crude Oil Pipeline, or Adcop, and is built for the Abu Dhabi government investment firm International Petroleum Investment Co., or Ipic.
Iran last year ratcheted up threats to close the Strait of Hormuz if the European Union goes through with an embargo on Iranian oil, the latest step taken to pressure Tehran into giving up a nuclear programme that the West suspects is aimed at securing atomic weapons.
The Strait is one of the world’s busiest tanker routes through which Gulf oil producers ship their crude exports.
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