According to industry sources, the crude oil pipeline in the UAE, one of the world's top five oil exporters, which will bypass the Strait of Hormuz is nearly complete with first oil to flow before the end of the year.
The Abu Dhabi Crude Oil Pipeline (ADCOP) project, a 480 km pipeline with a capacity of up to 2.5 million bpd – would allow the UAE to avoid the risky sea route and boost exports from its Fujairah terminal on the Gulf of Oman.
An industry source with direct knowledge of the pipeline stated: "Oil could flow through the pipeline from end-December initially at 1 million bpd and gradually increase to 2 million bpd.”
"There's a hurry to get this operational," he said, adding that the start-up of the pipeline would ease a serious bottleneck in the Gulf.
According to the US Energy Information Administration (EIA), the Strait of Hormuz is the most important oil transit channel in the world, with some 15.5 million bbls or about a third of all sea-borne oil passing through in 2009. US warships patrol the area to ensure the safe passage.
The 6.4 km-wide shipping channel between Oman and Iran sees most of the crude exported from Saudi Arabia, Iran, the UAE, Kuwait and Iraq – together with nearly all the LNG from lead exporter Qatar – pass through.
The pipeline would link state oil firm Abu Dhabi National Oil Company's Habshan oilfields to the port of Fujairah, one of the top three bunkering hubs and a major oil storage terminal.
China Petroleum Engineering & Construction Corporation is the engineering, procurement and construction contractor (EPC) and Abu Dhabi government-owned International Petroleum Investment Company (IPIC) is undertaking the project.
"The construction of the pipeline is completed. They are now evaluating the operational costs and the logistics of it," a second source, based in Dubai said. "They are recruiting new people as it is a big operation," he added.
Two other sources based in the UAE confirmed the timeline for the start-up of the project. There has not yet been an official announcement for the commissioning.
According to another source, the pipeline is to carry Murban crude; therefore, Abu Dhabi Company will undertake the initial operation of the pipeline for Onshore Oil Operations (Adco).
The state-owned company will operate and proceed with the preparations for the pre-commissioning, commissioning, start-up, performance testing and handover of the project facilities.
Abu Dhabi National Oil Co (Adnoc) holds a 60% stake in Adco. Its other shareholders are BP, Royal Dutch Shell, Total, ExxonMobil and Partex Oil and Gas.
Near the pipeline in Fujairah, IPIC is planning to undertake a US$3 billion refinery project, which it aims to complete in mid-2016.
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