Saudi Arabia plans to raise its capacity to bypass the strait of Hormuz by 3mn b/d of crude, to 10mn b/d, within the next two to three years, energy minister Prince Abdulaziz bin Salman said today.
Since the start of the US-Iran war, the 7mn b/d East-West crude pipeline has allowed Saudi Arabia to channel part of its crude from production facilities in the east to the Red Sea terminal at Yanbu and away from the dangerous and largely closed Hormuz waterway. But repeated attacks on key energy infrastructure, including the East-West pipeline, have highlighted the need for Riyadh to add more redundancy to its export system.
State-controlled Aramco is studying two new oil export routes to bypass the strait, in addition to the three it already has, its chief executive Amin Nasser said last week. These plans are at feasibility stages, he said, and probably several years from completion.
Speaking today at the WPC Energy Congress in Riyadh, Prince Abdulaziz announced two other initiatives, including a plan to repurpose a gas pipeline.
"We have a gas pipeline… [and] we are working with Aramco to make sure that we can have it as dual use, such that you will have pumping stations and compressor stations," said Prince Abdulaziz. "We could then utilise it, subject to the situation."
He did not disclose the pipeline's route, saying only that it should allow the country to send 1.2mn b/d of additional crude away from Hormuz within seven or eight weeks. This could rise to 3mn b/d with further investment, he said.
When the initial phase of this project is complete, the 1.2mn b/d will be available to Aramco until May, Prince Abdulaziz said, after which it will need to be cleaned and switched back to gas ahead of hotter summer months when gas demand peaks.
"We are also improving the pumping stations of the East-West pipeline, so hopefully, in a way, we may end up with 10mn b/d [of Hormuz bypass capacity] within the next two to three years," he said.
Pipeline partnerships
The US-Iran war and the effective closure of the strait forced several Mideast Gulf countries to shut in a significant part of their crude production because of limited storage and alternative export routes.
Saudi Arabia and the UAE have pipelines that allowed them to divert at least some of their output away from the strait. Kuwait, Qatar and Bahrain do not, severely limiting their ability to export crude and products.
Kuwaiti state-owned KPC chief executive Sheikh Nawaf al-Sabah said in June his company was exploring tie-ups with neighboring countries like Saudi Arabia and the UAE that could help move its oil to market. Prince Abdulaziz appeared to allude to this today, saying Saudi Arabia and Kuwait are engaged on a project to jointly develop a new Hormuz bypass pipeline.
"The idea is to [broaden] the ownership, the operatorship, the design, the financing… to ensure that it becomes… not a Saudi or a Kuwaiti pipeline, but an international one," he said. "Because the lesson learned is that the more international participation in a pipeline, the better the chances that they will be protected."
