October 7, 2010 / 2:05 PM / 9 years ago

UAE's Habshan-Fujairah pipeline faces delay-sources

* Pipeline to face at least six months delay

* Pipeline aims to bypass the Strait of Hormuz

By Stanley Carvalho and Amena Bakr

ABU DHABI, Oct 7 (Reuters) - A crude oil pipeline in the United Arab Emirates that aims to bypass the Strait of Hormuz, and slated for completion by year-end, faces a six-month delay due to design changes, sources close to the project told Reuters.

The Abu Dhabi Crude Oil Pipeline (ADCOP) project — a 370-km pipeline with a capacity of 1.5 million barrels per day (bpd) — would allow the UAE, the world’s third largest oil exporter, to boost exports from its Fujairah terminal on the Gulf of Oman.

“The completion will not be before the second half 2011,” said a senior official of China Petroleum Engineering & Construction Corporation, the engineering, procurement and construction contractor (EPC) for the project.

Design changes and incorporating additional oil metering facilities were the main reason for the delay, the official added.

“The technology is new, not used before, that took an additional two to three months,” he said.

As per the project schedule, the pipeline is to be commissioned end of 2010, according to the China Petroleum’s website.

The pipeline would link state oil firm Abu Dhabi National Oil Company’s Habshan oilfields to the port of Fujairah, a major ship bunkering hub for vessels refuelling as they enter and leave the Strait.

“There is no way the project will be completed by the end of this year, it will be sometime in the second or even third quarter of 2011,” said a contractor close to the project, declining to be named.

The new pipeline would also lower shipping costs for the UAE’s oil exports, as shippers charge a premium due to the war risk for entering the strategic channel. The strait handles 40 percent of the world’s seaborne oil.

In July, a Japanese tanker was damaged near the waterway by a suspected explosion. [ID:nTOE67J04H]

More than 13 million barrels per day of crude — over 15 percent of global supply — flows from Gulf producers through the shipping chokepoint, according to the International Energy Agency.

Analysts fear Iran could seek to impede trade through the route if Western powers resort to military action in the row over Tehran’s nuclear programme.

Abu Dhabi government-owned International Petroleum Investment Company (IPIC) is undertaking the project. No one at IPIC was available to comment on the project.

Australia’s WorleyParsons (WOR.AX) and Germany-based ILF Consulting are carrying out the project’s front EPC design.

The pipeline could also supply a new refinery in Fujairah that IPIC plans to build. (Editing by James Jukwey)

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