A theatre of events

The Middle East is certainly no stranger to pipeline construction. Focusing on what is known as the Middle East proper, consisting of West Asia and the Persian Gulf, the region holds the bulk of the world’s discovered oil and gas reserves. These are concentrated mainly in Iran, Iraq and the Arab countries of the Southern Persian Gulf. Sometimes considered a Mediterranean country, Syria has small reserves of oil and gas with a limited export capability, now halted due to the EU/US sanctions imposed on the country engulfed in a civil war. Being a large energy consumer, the region is heavily dependent on fossil energy, mainly oil and gas with a small consumption of coal, reflecting the regional richness in oil and gas.

This reality has justified internal distribution pipelines, however, the region’s role as the single largest international supplier of oil and, increasingly, gas has been the major reason for pipeline activities. The largest portion of the regional exports is destined to remote consumer markets in Europe, the Americas and especially Asia in which the share of the Asia Pacific is the largest. Consequently, the bulk of the Persian Gulf countries’ oil and gas (LNG) exports are carried by sea tankers.

Arab regional players

Iran

The IPP is the shortened version of the Iran-Pakistan-India Pipeline meant to facilitate Iran’s gas exports to India via Pakistan. As India has left the project due to US pressure and its having domestic gas for its short-term needs, the project has been downgraded to IPP. With 900 km of the approximately 1100 km Iranian section (42 in.; 750 million m³/d capacity) completed, connecting Iran’s Persian Gulf gas terminal in Assaluyeh to the city of Iranshahr (US$ 3.2 billion), Managing Director of the National Iranian Gas Company Javad Owji announced in August that Iran’s gas export pipeline to Pakistan would reach the country’s border in the first half of the next Iranian calendar year (beginning on 21^st March 2013) and come onstream in September 2013.

Financing of the Pakistani section (785 km, 42 in.) to carry 21.5 million m³/d of Iranian gas (7.8 billion m³/yr) has been the major barrier to its construction scheduled for 2013, apart from US pressure on Islamabad to abandon the project. Iran announced in July its readiness to lay the Pakistani portion of the gas pipeline starting from an offtake point located near Gawadar at the Pakistan-Iran border to a point near Nawabshah, where Iranian gas will be injected into the Pakistani national gas network. Iran’s plans to set up an oil refinery in Pakistan’s Port of Gawadar were also revealed.

Iran’s reiteration of its ability to provide technical and financial help for constructing Pakistan’s section of the IPP resulted in the country forming a joint working committee with Pakistan in July to finalise a deal for Tehran’s laying that section. For its part, Pakistan has repeatedly stated its commitment to the IPP, including in April, when Pakistani Petroleum Minister Naveed Qamar stated the IPP’s gas flow is set to begin by December 2015 in his addressing the National Assembly of Pakistan. This was followed a month later with a formal Pakistani invite to contractors to pre-qualify for the engineering, procurement, construction, and commissioning of its section. In August, Pakistan’s Foreign Ministry spokesman, Moazzam Ahmad Khan, reiterated Islamabad’s determination to co-operate with Iran and complete the IPP. Scheduled to be completed by the end of 2014, German-based firm ILF has completed detailed engineering design of the pipeline estimated to cost US$ 1.2 - 1.5 billion. The participation of the Iranian and Pakistani companies in the project is expected to bring the cost down. Reportedly, Pakistan is also discussing the construction of the pipeline with China and Russia.

Turkey

Seeking to turn itself into the main transit route for Azeri and eventually Kazakh and Turkmen piped oil and gas exports, Turkey’s success in helping to realise Azerbaijan’s Baku-Tbilisi-Ceyhan Oil Pipeline and the Baku-Tbilisi-Erzurum Gas Pipeline through which Baku conducts the bulk of its piped oil and gas exports to Europe via Turkey, has motivated Ankara to focus on a new gas pipeline, the Trans-Anatolian Pipeline (TANAP) also known as the Trans-Anadolu Gas Pipeline passing through Georgia and Turkey on its way to Europe.

In July, Turkish Prime Minister Recep Tayyip Erdogan and Azeri President Ilham Aliyev signed an intergovernmental agreement for the TANAP to officially launch the project whose MoU was signed in January. The 2000 km pipeline to be realised at US$ 7 billion will carry approximately 16 billion m³/yr of gas from Azerbaijan’s Shah Deniz II gas field (set to be operational by 2017) of which 6 billion m³ will be used by Turkey and the rest will be exported to Europe.

To be owned by Azeri state firm SOCAR (80%) and Turkey’s BOTAS (20%), the pipeline’s construction is planned to commence in 2013, with its first phase scheduled to be commissioned in 2016. As per its MoU, third-party companies will be allowed to join the consortium during the construction phase.

The regional Arab players of the Persian Gulf

Iraq

Operating the Garraf oilfield in Iraq (1 billion bbls field between the southern cities of Karbala and Nasiriya), Malaysian oil company Petronas opened a tender in June for a new pipeline to take early production from the field to its central export infrastructure. The field’s eventual production target is 230 000 bpd, but its 2012 capacity is expected to be around 50 000 to reach 60 000 bpd in 2013 and 100 000 bpd in 2014. The pipeline’s details, including its length and capacity, are unknown at the time of writing.

Kuwait

Petrofac has received a contract from the Kuwait Oil Company for developing pipelines with undisclosed specifications from Mina Al Ahmadi to the Azzour and Shuaiba power stations in Kuwait. Valued at approximately US$ 404 million to be realised in 23 months, the project is for engineering, procurement and construction services for the installation of fuel gas and gas oil pipelines. The project includes a fuel oil pumping station, metering systems, utilities systems and associated electrical, instrumentation and telecommunication works.

Saudi Arabia

Perhaps the major pipeline development in Saudi Arabia for its political and strategic significance is the June reopening of the IPSA. Confiscated from Iraq in 2001, the IPSA connects Iraq across Saudi Arabia to Yanbou, a major Red Sea port in the Al Madinah Province in western Saudi Arabia about 300 km from Jeddah. The pipeline has the capacity of 1.65 million bpd of oil, increasing Saudi Arabia’s export capacity via the Red Sea to bypass the Strait of Hormuz.

UAE

The commissioning of the ADCOP in July is certainly an important development in the Persian Gulf for its mentioned capability to bypass the Strait of Hormuz to export UAE oil. With a capacity of 75 million tpy, the approximately 424 km (48 in.) pipeline consists of onshore (405 km) and offshore (19 km) sections capable of delivering 1.5 million bpd.

An undertaking of the China National Petroleum Corporation in charge of engineering, procurement and construction services, the ADCOP extends from the Habshan oilfield to the Fujairah Port, bypassing the Hormuz Strait. Its first shipment of exported crude oil was loaded in a sea tanker on 5^th July 2012 at the Fujairah Port on the Oman Sea providing access to the Indian Ocean via the adjacent Arabian Sea. According to a January statement from UAE Minister of Energy Mohammed Al-Hamli, the pipeline exports around 70% of the UAE’s oil production via Fujairah.

Yemen

Being engulfed in a civil war as a byproduct of the Arab Spring, there has not been any major pipeline construction in Yemen. Given constant acts of sabotage on its pipelines by extremist groups, repairing the damaged pipelines has accounted for the bulk of the country’s pipeline activities. In particular, the 320 km Balhaf Pipeline – the country’s only gas pipeline feeding its LNG terminal (partly owned by Total) in the village of Zahira (Shabwa Province) on the Gulf of Aden – has been attacked repeatedly, most recently in August. This has had the effect of halting its operation and thus Yemen’s LNG exports, which are mainly bound for China and South Korea. The normal operation of the pipeline is highly unlikely given the expanding civil war and the Yemeni government’s diminishing control over its country.

This is an abridged version of the full article from Dr. Hooman Peimani, which was published in the October 2012 issue of World Pipelines, available for subscribers to download now.

Read the article online at: https://www.worldpipelines.com/business-news/27092012/dr_hooman_peimani_reports_on_increased_pipeline_activity_in_the_middle_east/