Emirates readies oil export detour to avoid Hormuz

By Adam Schreck

Associated Press

Published: Friday, June 8 2012 12:00 a.m. MDT

Tightening sanctions against Iran are also straining its reliance on Dubai and other long-established Emirati trading ports.

With tensions high, Emirati officials are careful not to link the pipeline directly to threats from their neighbor across the Gulf.

Yet there is little doubt the pipeline is an insurance policy against any threat to the strait.

"It gives a sense of security just in case there are any issues," UAE Minister of Economy Sultan bin Saeed al-Mansouri said this week when asked about the economic benefits of the project. Only later did he add that the pipeline would also offer additional export capacity if oil production increases.

For Fujairah, the pipeline is a way to solidify its standing as an emerging petroleum hub.

About two dozen ships on average already pick up fuel for their own engines in Fujairah every day, according to editor Ada Taib at Bunkerworld, an online site that tracks the industry. Port authority estimates show it is now the world's second busiest maritime refueling spot globally after Singapore, she said.

The waterfront around Fujairah port is dotted with more than 100 towering fuel silos. Eight larger storage tanks, each capable of holding 1 million barrels of crude, mark the terminus for the new oil pipeline.

Even more energy infrastructure is on the horizon.

IPIC, the Abu Dhabi company building the crude pipeline, is planning a $3 billion, 200,000 barrel-a-day refinery at Fujairah. It and another government-backed firm, Mubadala Development Co., in March announced they will develop a terminal at Fujairah to receive liquefied natural gas for domestic use.

"There's a recognition that it's a strategic asset having an outlet on the Indian Ocean," said Mills, who added that the UAE is eager to get the crude oil pipeline running as soon as it can. "Tensions do come and go pretty quickly. You always want to have it ready."

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