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Abu Dhabi building pipe to avoid Hormuz 3, June 2010

Posted by thegulfblog.com in Qatar, Soft Power, The Emirates.
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(Square – Habshan Refinery. Triangle – Fujairah. Elipse – Straits of Hormuz)

Abu Dhabi’s government is spending $3 billion building a 375km oil pipeline from their refinery at Habshan south west of Abu Dhabi itself to Fujairah on the Emirates’ east coast which avoids the Straits of Hormuz choke point. Were some kind of conflagration to occur and Iran to attempt to close down the Straits as they promised to do, the Emirates unlike Qatar and Kuwait, would still be able to sell their oil to the world market (as well as reaping the benefits of the astronomical price, were Iran to close the Straits).

Whilst Qatar has mooted on several occasions an idea of building a pipe for its gas through Saudi Arabia and onto Turkey, there are significant hurdles involved. Saudi Arabia has their 745 miles-long East-West pipeline but this does not have the same capacity or cost base as their shipping.

Originally planned to open in 2009 it is now expected to open in August 2011.

It is also interesting to note that it is a Chinese Company that has been contracted to build the pipeline. I wonder what exactly the terms were for that deal i.e. whether China insisted on ‘first dibs’ on the oil that comes out the other end, were the worst to happen.

Hat tip: MEED Issue No 22 28 May – 3 June 2010

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