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MEOG Commentary MEOG
Saudi scrambles
to add to export
options
Khaled al-Falih has announced plans to speed up the expansion of the East-West oil pipeline as Saudi Arabia looks to increase exports from its Red Sea ports
saudi arabia
What:
Saudi is currently not using the full 5mn bpd capacity of the East-west pipeline, but intends to add another 2mn bpd to the cross-country conduit within two years.
Why:
The plans follow the earlier announcement that the pipeline would be expanded over a longer period.
What next:
Saudi Arabia has already increased export capacity at its terminals to 15mn bpd, far higher than the 6.8-7.8mn bpd it has been exporting in recent years, and these moves appear to be an effort to give Riyadh options and to ease market tensions.
LASt week Middle East Oil & Gas (MEOG) reported on Iraq’s plans to speed up work to expand its export options amid heightened ten- sions surrounding tanker tra c passing through the Strait of Hormuz.
is week it was Saudi Arabia’s turn to unveil its own ambitious e orts to add to export pipe- line capacity avoiding the Gulf.
these moves focus on the expansion of cross-country oil infrastructure that would allow the kingdom to increase ows through its ports on the Red Sea, rather than those on its Gulf coast to the east.
Cross-country
Speaking to Reuters during a visit to India, Saudi Energy Minister Khalid al-Falih said that Riyadh intended to raise the capacity of the East-West (Petroline) pipeline from the current 5mn bar- rels per day to 7mn bpd within the next two years. e announcement follows the inclusion of plans to expand the East-West pipeline by 1.5mn bpd by 2023 in the Aramco prospectus for international investors, released in April.
e prospectus said that the 1,200-km “East- West pipeline is critical in linking oil production facilities in the Eastern Province with Yanbu on the west coast, and providing exibility to export from the east and west coast of the kingdom.”
Saudi utilises less than half of the giant pipe- line’s capacity, with Aramco reporting that the conduit had “transported an average of 2.1mn bpd of crude” in 2018.
terminal velocity
Wary of the perennial threat of disruption in the Strait of Hormuz, Saudi has improved its Red Sea export capabilities, recently overhauling the Muajjiz crude oil terminal, located to the south of Yanbu industrial city, having launched the project during the early years of the decade.
Also known as Yanbu South, the plant com- prises a tank farm and offshore facilities to receive, store and load the kingdom’s valuable Arabian Light and Arabian Super Light crude.
An engineering, procurement and construc- tion (EPC) contract tendered in 2015 called for the rehabilitation of existing infrastructure, com- prising 10 tanks, three berths and four loading arms, and the replacement of other facilities to increase handling capacity to around 3mn bpd.
In October 2018, Aramco announced com- pletion of the rehabilitation and the terminal’s integration with the kingdom’s existing crude supply network, including a second crude ter- minal at Yanbu with capacity of 1.3mn bpd.
e completion of Muajjiz takes Aramco’s total export capacity to around 15mn bpd, with
Aerial view of Bab-el Mandeb
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w w w . N E W S B A S E . c o m Week 30 30•July•2019