UAE starts up pipeline to bypass Strait of Hormuz

The pipeline would give the OPEC member insurance against Iranian threats to block the strategic waterway.

Updated: Jul 15, 2012, 23:39 PM IST

Dubai: The United Arab Emirates on Sunday inaugurated a much-anticipated overland oil pipeline that bypasses the Strait of Hormuz, giving the OPEC member insurance against Iranian threats to block the strategic waterway.

The 380-kilometer (236-mile) Abu Dhabi Crude Oil Pipeline snakes across western desert dunes and over the craggy Hajar mountains to the city of Fujairah on the UAE`s Indian Ocean coast, south of the strait.

Until now, all Emirati exports were loaded in the Gulf and then sailed out through Hormuz. Once it is running at full capacity, the pipeline could allow the country, OPEC`s third biggest exporter, to ship as much as two-thirds of its peak production through the eastern port city.

It is designed to carry at least 1.5 million barrels a day of crude, though capacity is expected to eventually rise to 1.8 million barrels daily.

Efforts to bring the long-awaited export route online have gained increased urgency in recent months because of repeated threats by Iranian officials to close Hormuz if the country`s own exports are blocked.

The narrow strait is patrolled by Iranian warships as well as by the US Navy and its allies. It is the export route for about 17 million barrels of oil a day, or a fifth of the world`s oil supply.

The chairman of Iran`s Joint Chiefs of Staff said today that Tehran has a contingency plan to close the key route, though any decision to shut it rests with the country`s Supreme Leader, Ayatollah Ali Khamenei.

Gen Hasan Firouzabadi`s comments come two weeks after the European Union enforced a total oil embargo against Iran. The move is part of a series of sanctions meant to force Tehran to halt its uranium enrichment program. The West suspects Iran is aiming to build nuclear weapons. Iran denies the charge.

Emirati officials quietly began filling the new pipeline with oil on June 30, according to the UAE embassy in Washington. A statement from the embassy said the project underscores the US ally`s "commitment to ensuring the reliable and safe delivery of crude oil ... To global markets."

Officials including the Emirates` energy minister gathered in Fujairah for the formal inauguration of the pipeline, said Mohammed Saif al-Afkham, the director general of Fujairah municipality.

The International Petroleum Investment Co, the state-run company behind the project, confirmed that the pipeline became operational with the first commercial shipment being loaded onto a tanker for export.