Page 6 - DMEA Week 26

DMEA COMMENTARY DMEA

Rouhani kicks off work on pipe

skirting Hormuz

The pipeline will allow oil to be shipped from ports beyond the Strait of Hormuz, safeguarding
against potential showdowns between Iran and the US and Saudi Arabia

IRAN IRANIAN President Hassan Rouhani last week
officially launched work on an oil pipeline link-
ing the Gulf port city of Goreh in Bushehr Prov-
ince to Jask on the Sea of Oman. Middle East Oil
& Gas (MEOG) understands that construction
work began nearly two months earlier.
The key significance of Jask is that it is located
outside the mouth of the Strait of Hormuz on the
Sea of Oman, meaning oil shipped from there
may avoid any disruption to routes caused by the anticipated in 2024.
Islamic Republic’s showdown with the US and Of the $1.8bn total project cost, the Goreh-
Saudi Arabia over sanctions and its refusal to Jask pipeline is anticipated to come in at around
respect the 2015 nuclear deal. $1.1bn, with the remainder being spent on the
Speaking during a ceremony to inaugurate development of the port.
the project, Rouhani was quoted by the local Also speaking at the ceremony, Zanganeh
Tasnim news agency as saying: “What is strate- said that around $300mn had so far been spent
gic about this project is that many countries in on the project, with the remaining funds to be
the region have managed to find a second way so provided by local investors.
that they can export their oil using other routes The Jask port will feature 20 tanks with a total
whenever the Strait of Hormuz faces danger. storage capacity of 10mn barrels of crude, with
Alternative methods could be exporting oil plans in train to expand export infrastructure.
through the Red Sea, the Sea of Oman or the
Mediterranean.” Gas link
Rouhani added that the 1mn barrel per day While work has been ongoing on a 2,775-km gas
(bpd) pipeline would come into operation in pipeline to Pakistan for what seems like an eter-
March 2021, allowing crude exports from Jask nity, Iran has also sought to make use of other
to increase. “Jask will turn into Iran’s key hub of regional allies.
oil exports,” he added. In particular, a subsea pipeline has long been
At present the Kharg Island terminal in in the works that would link southern Iran with
the Gulf accounts for 90% of the country’s oil gas export facilities in Oman.
exports. A memorandum of understanding (MoU)
A deal was signed for pumps for the conduit’s was signed between Tehran and Muscat in 2014
five pumping stations in October 2019. National for the latter to import at least 10bn cubic metres
Iranian Oil Co. (NIOC) subsidiary Petroleum per year of gas from Iran for 25 years beginning
Engineering and Development Co. (PEDEC) in 2017. In 2018, National Iranian Gas Export
signed the deal with three Iranian industrial Co. (NIGEC) managing director Mehran
manufacturers to produce pumps for the 1,000- Amir-Moeini said last year that 43 bcm per year
km pipeline. would be imported for 15 years. This represents
Rouhani said that around 400 km of 42-inch a total increase of 395 bcm.
(1,067-mm) pipeline had already been built to The land section of the project is expected to
move sour crude, adding that it would also be comprise a 200-km, 56-inch (1,422-mm) pipe
capable of transporting condensate. to run from Rudan to Mobarak Mount in Iran’s
Iranian firms are relying on local technol- southern Hormuzgan Province. The subsea sec-
ogy to continue the expansion of Iran’s oil and tion will be 192 km in length, with a diameter of
gas industry because foreign companies are no 36 inches (889 mm), and this will run along the
longer willing to enter the marketplace owing to seabed at depths of up to 1,340 metres, from Iran
anxiety that they might get hit by US sanctions. to the Omani port of Sohar.
Backed by the Ministry of Petroleum (MoP) The deal agreed in 2014 was intended by Iran
and Oil Minister Bijan Zanganeh, the contract is to enter, by proxy, the LNG market by utilising
estimated to be worth $52.5mn, with completion unused export capacity at Oman LNG. ™

P6 www. NEWSBASE .com Week 26 02•July•2020