A strategic pipeline for United Arab Emirates’ oil exports to bypass the Strait of Hormuz could face more delay due to differences with the Chinese construction company, industry sources told Reuters on Thursday.
The delay to the Habshan-Fujairah pipeline has reportedly been caused because ADCO – the onshore oil company for Abu Dhabi – was not previously consulted about the pipeline, despite ADCO’s crude providing the feedstock.
In a previous commentary, we identified that problems with the China Petroleum Engineering & Construction (CPEC) may be to blame for the delay.
“The project might face more delays because there is a debate over the quality of the pipeline between Abu Dhabi’s National Oil Company and the Chinese construction group,” an industry source close to the project told Reuters.
“The Chinese (construction) company is ready to commission the pipeline but ADCO (ADNOC’s onshore unit) has to make sure first it suits its standards,” the source told Reuters. “So now they’re working to do that. (The project) was initially done without the involvement of ADCO. That’s why now they have a problem. The Chinese company has different standards.”
The Dolphin gas pipeline project, which takes gas from Qatar to Fujairah along a pipeline running within three metres of the ADCOP line, was completed only eight weeks behind schedule, despite also crossing borders between Emirates.
The 370 km Habshan-Fujairah pipeline, is slated to take ADCO’s oil to the north east coast of the Arabian peninsula, bypassing the Strait of Hormuz. Fujairah is becoming a major global bunkering hub as it offers access more directly to tanker traffic and avoids the Strait, which has been subject to repeated threats of closure from an embattled Iran.
A Dubai-based analyst who declined to be named told Reuters they expected the pipeline to be ready in August or September, a further delay to the June start date given by Mohammad Bin Dha’en Al Hameli, the UAE’s Minister of Energy.
