Alternative to Hormuz: A canal through UAE/Oman

Discussion in 'West Asia & Africa' started by Yusuf, Dec 29, 2011.

  1. Yusuf

    Yusuf GUARDIAN Administrator

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    I wonder if this is a possibility that can be explored considering the trouble that can be caused Iran if there is no regime change there which is not hardliner and is pro business if not pro west. What will be the cost of it and i am sure that the two countries would benefit from the transit charges that they will levy.
     
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  3. Shaitan

    Shaitan Zandu balm all day Senior Member

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    Why not a canal through just UAE??

    [​IMG]
     
  4. Yusuf

    Yusuf GUARDIAN Administrator

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    i saw the map. Only through UAE will still make it vulnerable to Iran. Though it is possible
     
  5. asianobserve

    asianobserve Elite Member Elite Member

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    Why a canal? Why not a less expensive network of pipes to Oman (for Asian distribution)? Then later on to Syria (after Assad is deposed) from Iraq and SA (for EU distribution).
     
    Last edited: Dec 29, 2011
  6. asianobserve

    asianobserve Elite Member Elite Member

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    Here's a more detailed map:

    [​IMG]
     
  7. HeinzGud

    HeinzGud Senior Member Senior Member

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    Business mate it's all ways business. Who wants to cut the revenue of the shipping industry!
     
  8. asianobserve

    asianobserve Elite Member Elite Member

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    I can understand that but the Saudis and the rest can also venture into pipe distribution just like how they've ventured into oil shipping...
     
  9. HeinzGud

    HeinzGud Senior Member Senior Member

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    Maybe they are bit afraid about the terrorist activities!
     
  10. asianobserve

    asianobserve Elite Member Elite Member

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    Oh, I'd rather deal with sporadic terrorist activities than be at the strategic mercy of your biggest enemy...
     
  11. Sridhar

    Sridhar House keeper Moderator

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    Saudi are already Shipping Oil From Red Sea. And any blockade of Hormuz will not lost longer which will not require any alternate plans.
     
  12. asianobserve

    asianobserve Elite Member Elite Member

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    The Iraqis and Kuwaitis would still be hard hit in case of Iranian blockade. Although it may be true that Iran cannot impose a prolonged blockade...
     
  13. KS

    KS Bye bye DFI Veteran Member

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    Iran trying to impose a blockade is like throwing shyt on its own head.

    Americans and GCC states will be shytting them in no time.
     
  14. p2prada

    p2prada Stars and Ambassadors Stars and Ambassadors

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    Holy Hell
    The venture will not even reach the drawing board. Iran will not stop shipping anywhere. Heck even India will join the US in blowing up their ships.

    Let's assume the canal was built. Firstly the canal will be heavily dependent on the notion that Iran will block all passage, which is frankly impossible for a Navy their size.

    Secondly, the costs will be extremely high. The Middle Eastern states are rich, but not that rich. Let Dubai save itself first.

    Thirdly the costs will be amortized over many years, probably a decade or two. Costs recovery can be achieved only if Iran managed to successfully block shipping for that long and other countries use this facility.

    Lastly and most importantly, what if Iran never blocks anything? This would mean the canal would never be used and would be as big a blunder as the Palm islands, except for the fact that the Palm islands cost only a fraction of the cost compared to the "Hormuz" canal we are talking about.

    The Americans don't need a canal to ensure supplies. They can plough through any type of opposition.
     
  15. W.G.Ewald

    W.G.Ewald Defence Professionals/ DFI member of 2 Defence Professionals

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    Better to deal with that unspeakable bully straight out than to look for some expensive engineering solution. Same goes for that other mentally ill country, North Korea.

    But then, we have that post-American president in the White House.
     
  16. W.G.Ewald

    W.G.Ewald Defence Professionals/ DFI member of 2 Defence Professionals

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    Ok, after posting this I go to Lucianne.com and this ad appears on the page, offering dates with Persian women.

    Muslim Dating and Marriage

    How bizarre.
     
  17. Bangalorean

    Bangalorean Stars and Ambassadors Stars and Ambassadors

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    Well reasoned. :thumb:

    Any 'naval blockade' by Iran will not last more than a few days. It would be much cheaper to blow their ships up if they contemplate such a thing.
     
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  18. civfanatic

    civfanatic Retired Moderator

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    Why would Iran impose a blockade anyway?

    Are you referring to Iran or the United States?
     
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  19. Ray

    Ray The Chairman Defence Professionals Moderator

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    This is a viable option and Oman will benefit immensely.
     
  20. W.G.Ewald

    W.G.Ewald Defence Professionals/ DFI member of 2 Defence Professionals

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    I should have been more clear and specified Iran :-D
     
  21. Sridhar

    Sridhar House keeper Moderator

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    Hormuz Bypass Oil Pipeline Is Delayed Amid Iran Tensions
    January 10, 2012, 4:26 PM EST

    By Bruce Stanley, Ayesha Daya and Anthony DiPaola

    (Updates with minister confirmation in third paragraph.)

    Jan. 9 (Bloomberg) -- A pipeline that would allow oil from the United Arab Emirates to bypass the Strait of Hormuz separating it from Iran has been delayed because of construction difficulties, two people with knowledge of the matter said.

    As many as 270 construction issues have pushed back the completion date, said the two people, declining to be identified because they’re not allowed to speak publicly on the matter. The $3.3 billion project won’t be ready until at least April, one of them said. Abu Dhabi, holder of most of the U.A.E.’s oil reserves, had planned to start exports in January 2011 through the pipeline to a port outside the strait, Dieter Blauberg, the project’s former director, said in May 2009.

    “The pipeline is almost complete, so hopefully it will be operational, say, within six months, by May-June,” U.A.E. Oil Minister Mohamed al-Hamli told reporters in Abu Dhabi today, confirming more time is needed to finish it. “It’s a big project, there’s a lot to do.”

    The 1.5 million barrel-a-day link would ensure the U.A.E. can export crude without risking a blockade at Hormuz, where fully laden tankers exit the Persian Gulf with one-fifth of the world’s traded oil. The possibility that Iran might try to close the waterway has intensified as Europe prepares to follow tougher U.S. sanctions on the country over its nuclear program. Iran has started to enrich uranium at its Fordo production plant, the official Kayhan newspaper reported yesterday.

    “That pipeline would carry pretty much all of Abu Dhabi’s oil,” Robin Mills, an analyst at Manaar Energy Consulting in Dubai, said Jan. 5. “It’s a critical bit of infrastructure, and it is remarkable it hasn’t been completed.”

    An average of 14 crude tankers sail each day through the strait, which is 21 miles (34 kilometers) wide at its narrowest point, according to the U.S. Energy Information Administration.

    Important Chokepoint

    Most of the oil exported by Saudi Arabia, OPEC’s biggest producer, as well as crude from Iraq, Kuwait, the U.A.E., Qatar and Iran itself must pass through the waterway, making Hormuz the world’s most important chokepoint, with a daily flow of 17 million barrels a day last year, according to EIA data.

    An official at International Petroleum Investment Co., the pipeline’s owner, declined to say when the project would start when asked by Bloomberg on Jan. 3, and the company didn’t respond to an earlier e-mail seeking comment. China Petroleum Engineering & Construction Corp., the pipeline’s contractor, didn’t respond to a fax seeking comment on Dec. 15, and a spokesman for its parent China National Petroleum Corp. declined to comment when Bloomberg contacted him that day by telephone.

    An official at Abu Dhabi Co. for Onshore Oil Operations, or ADCO, the state company assigned to operate the pipeline, referred all inquiries to IPIC, speaking by phone on Jan. 6. Abu Dhabi National Oil Co., or Adnoc, which owns 60 percent of ADCO, didn’t respond to questions e-mailed on Dec. 21, and public relations officials had no immediate response when contacted by phone that day and on Dec. 22 and Jan. 3.

    Across Desert, Mountains

    Among ADCO’s minority shareholders, Royal Dutch Shell Plc declined to comment in a Dec. 21 e-mail, and Exxon Mobil Corp. referred inquiries to ADCO in a Dec. 22 e-mail. BP Plc declined to comment in a Jan. 3 e-mail, and a Partex Oil and Gas official declined to comment by phone on Jan. 4. Total SA didn’t respond to a Dec. 21 e-mail seeking comment.

    Once ready, the pipeline will transport crude from Habshan, the collection point for Abu Dhabi’s onshore oil fields, over 230 miles (370 kilometers) of desert and razorback mountains to the port of Fujairah, on the U.A.E.’s eastern coast, facing the Gulf of Oman. The project’s declared aim is to “offset reliance” on Gulf terminals while reducing shipping congestion, according to IPIC, the Abu Dhabi government-run owner.

    The line terminates at a kilometer-long (0.6 mile-long) site containing eight white storage tanks and pipes stacked four high over the length of a football field nestled at the foot of the Hajar Mountains.

    Faster Sailing

    Tankers will also save two days sailing time, worth about $38,000, by loading at Fujairah instead of Abu Dhabi, according to data provided by Clarkson Research Services Ltd.

    IPIC initially planned to begin filling the pipeline in September 2010 then load cargoes the following January, Blauberg said in 2009. It later pushed back the start without explanation, saying in a bond prospectus on Oct. 19, 2011, that it expected to deliver first oil in “early 2012.”

    The U.S. tightened economic sanctions against Iran over its nuclear program on Dec. 31, and the European Union is weighing a ban later this month on purchases of Iranian crude. Iran held 10 days of naval maneuvers east of Hormuz ending Jan. 3 and warned it would block the strait if prevented from selling its oil, according to Iranian state-run news agencies.

    A potential Hormuz blockade “still remains the ultimate fear in the oil market,” Barclays Plc said in a Jan. 5 note. Brent crude futures have risen 6 percent so far this month to $113.75 a barrel.

    ‘Greatest War Games’

    Iran plans even bigger military maneuvers in and near the strait next month, the state-run Fars news agency reported on Jan. 5. The drills will be the “greatest naval war games” ever conducted by the elite Revolutionary Guard Corps, Fars said, citing Brigadier General Ahmad Vahidi, the defense minister.

    Iran has the ability to block the Strait of Hormuz “for a period of time,” and the U.S. would take action to reopen it, Joint Chiefs of Staff chairman General Martin Dempsey said in an interview on the CBS “Face the Nation” program.

    Should Hormuz be sealed off to ships, the pipeline alone won’t prevent price rallies because most of the oil from the Gulf would still be stopped, Kamel al-Harami, an independent oil analyst said by phone from London on Jan. 6.

    Price Impact

    Weeks of Iran tension has added about $10 a barrel to Brent crude prices, said al-Harami, who was head of crude and products marketing at state-run Kuwait Petroleum Corp. during the 1980s “Tanker War,” when Iran and Iraq attacked each other’s ships.

    Still, a closure of the strait by Iran, in response to opposition to the nation’s nuclear program, is not a “high- likelihood event,” David Fyfe, head of the International Energy Agency’s oil market and industry division, said in a Jan. 4 phone interview from Paris.

    A Jan. 5 visit to the Fujairah site identified by a black- and-white sign saying “Abu Dhabi Pipeline Co. Oil Terminal” showed construction workers in blue overalls and hardhats shuttling by bus into and out of the oil storage facility.

    Of the 270 construction issues detected during an inspection of the project last year, more than 50 were deemed critical, according to one of the people with knowledge of them.

    --With assistance from Baizhen Chua in Beijing and Grant Smith in London. Editors: Stephen Voss, Raj Rajendran, Rachel Graham, Maher Chmaytelli

    To contact the reporter on this story: Bruce Stanley in Dubai at [email protected]; Ayesha Daya in Dubai at [email protected]; Anthony DiPaola in Abu Dhabi at [email protected]

    To contact the editor responsible for this story: Stephen Voss on [email protected]
    Hormuz Bypass Oil Pipeline Is Delayed Amid Iran Tensions - Businessweek
     

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