by Staff Writers
Fujairah, United Arab Emirates (UPI) Jul 27, 2012
The United Arab Emirates and Saudi Arabia have developed a pipeline network across the Arabian Peninsula to bypass the strategic Strait of Hormuz, a key oil artery that Iran threatens to close. But this could still be vulnerable to sabotage.
Gulf specialist Simon Henderson of the Washington Institute for Near East Policy cautions that Iran, or pro-Iranian Shiites in Saudi Arabia and Bahrain, could target vital pipelines if hostilities erupt in the region where U.S. forces are confronting Iran's naval and missile power.
"Violence in eastern Saudi Arabia and continuing tension in Bahrain are reminders that gulf oil exports face other threats beside potential Iranian closure of the Strait of Hormuz," he warned in an analysis.
Abu Dhabi, the leading emirate in the seven-member confederation, began pumping oil through a newly built pipeline from its main oil fields southward to an export terminal in Fujairah that lies outside the strait's southern mouth.
The pipeline, and others converted in Saudi Arabia, should significantly reduce Iran's power of global oil markets. So it's likely Tehran's seeking ways to cut those outlets as it leaders boast of blocking the narrow, 112-mile strait.
The 236-mile, $3.5 billion pipeline traversing the Emirates began operating, with little fanfare, July 15. That was two weeks after the United States and the European Union escalated sanctions designed to throttle Iran's oil exports, the backbone of its economy.
This strategically important alternative export route has a capacity of 1.5 million barrels per day and will carry 75 percent of the Emirates' production of 2.4 million bpd.
Saudi Arabia has modified a natural gas pipeline running 750 miles from its main oil fields in its Eastern Province on the gulf coast across the peninsula to the Red Sea port of Yanbu, also bypassing the strait.
The pipeline, built during the 1980-88 Iran-Iraq war to pump Iraqi oil overland rather than risk it on tankers in the war-stricken gulf waterway, can carry 2 million bpd. That's about 25 percent of Saudi Arabia's normal output.
The kingdom has three other oil and gas pipelines across its vast hinterland that bypass Hormuz: the oil-carrying Petroline built 30 years ago, a 300,000 bpd liquid gas pipeline parallel to Petroline and a pipeline used in the 1980s to carry oil but which now transports natural gas.
Together, these could move 6.5 million bpd, 40 percent of the 17 million bpd shipped through the Strait of Hormuz aboard supertankers.
That's 35 percent of global oil supplies. So cutting that off, even for a couple of weeks, would seriously disrupt the global economy.
In theory, the pipelines could be hit by Iranian missiles or airstrikes. But it's more likely that in the event of hostilities they' be targeted by sabotage teams in remote desert areas.
Saudi Arabia's Eastern province is predominantly Shiite, although nationally the sect is a minority. They oppose the Sunni monarchy. Trouble, which Riyadh claims is instigated by its longtime Shiite rival Tehran, periodically breaks out.
With sectarian tensions high, violence has flared in recent weeks and been crushed by heavy-handed security forces. The well-guarded oil fields haven't been attacked, although troops have shot several men who attacked police stations.
"The immediate implications for crude oil production are limited," said Crispin Hawes, director for the Middle East and North Africa at Eurasia Group risk consultants in London.
"But the repercussions for the stability of the province in the longer term are potentially significant."
Open conflict in the gulf could trigger attacks on the pipelines.
The Shiite majority in neighboring Sunni-ruled Bahrain has been in uproar since the Arab Spring pro-democracy uprising began in January 2011.
Many protesters have been killed or imprisoned. Saudi forces have deployed there to shore up the ruling Khalifa dynasty.
"Given the tensions in Saudi Arabia and Bahrain, the pipeline news will likely be a boon to global markets and the region's customers in Asia," the primary destination of gulf oil shipments through the strait, Henderson observed.
"But inciting the local populations is surely an attractive tactic for Tehran as it responds to sanctions on its own oil exports.
"So long as the political frustrations by Shiites in the two kingdoms remain conducive to exploitation by extremists, uncertainty will persist about the security of energy supplies," Henderson noted.
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