(Reuters) - Increasing tensions between Iran and the West over the Islamic Republic’s nuclear program have raised fears of possible military conflict in the Middle East and of disruption to flows of oil and gas that are vital to the global economy.
The Middle East accounted for about 30 percent of the 82.1 million barrels a day (bpd) of oil produced across the globe in 2010, according to the BP Statistical Review.
About half of the world’s oil is shipped by sea, and most of it passes through one of three narrow shipping lanes, two of them in the Middle East. Even a brief blockage could cause price spikes that threaten global economic growth.
On Monday, the United Arab Emirates (UAE) said a new pipeline would be operational by May or June, allowing it to bypass the Strait of Hormuz.
Below are facts about threats to the major energy transit routes of the Middle East and possible alternative routes.
The most important oil transit channel in the world, with some 15.5 million barrels per day, or about a third of all seaborne oil, passing through in 2009, according to the U.S.Energy Information Administration (EIA).
Most of the crude exported from Saudi Arabia, Iran, the UAE, Kuwait and Iraq — together with nearly all the liquefied natural gas (LNG) from lead exporter Qatar — must slip through a four-mile-wide (6.4 kilometer) channel between Oman and Iran.
Around three-quarters of the crude from the Gulf is sent to Asia — mainly Japan, India, South Korea and China.
Tensions over the Strait have been on the rise as Tehran has conducted military exercises and has threatened to shut it down if new sanctions around Iran’s nuclear program harm its oil exports.
The U.S. Fifth Fleet, based in Bahrain and responsible for an area that includes the Gulf, Red Sea, Gulf of Oman and parts of the Indian Ocean, said it would not allow any disruption of traffic in the Strait of Hormuz.
In the unlikely event the Strait of Hormuz becomes impassable, longer, costlier routes would be needed to get the oil to market.
Saudi Arabia used to pump oil through the Trans Arabian Pipeline across Jordan, Syria and Lebanon to the Mediterranean. But since the different legs of the 0.5 million bpd “Tapline” were shut from 1976 to 1990, Saudi has exported most of its crude on tankers passing through the Strait of Hormuz.
Its only other operational pipeline route is the Petroline, or “East-West Pipeline,” which mainly transports crude from fields clustered in the east the Red Sea port of Yanbu for export to Europe and North America.
The 5 million bpd Petroline could transport around 60 percent of total Saudi exports, which can get close to 8 million bpd. But it is already used for supplying markets west of the Suez Canal, leaving less than 5 million bpd of spare capacity for fuel looking for another way out of the Gulf.
Around two thirds of Saudi crude exports goes to Asia, so pumping it west across the desert and then shipping it east means tankers would also have to sail through the pirate-infested Bab el-Mandab Strait and Gulf of Aden on a voyage that is about 1,200 miles and five days longer.
A parallel 290,000 bpd Abqaiq-Yanbu natural gas liquids (NGL) pipeline links gas processing plants in the east with NGL export facilities at Yanbu. But it too provides only a partial alternative to Saudi shipments of NGL from the Gulf.
Saudi energy infrastructure has been targeted by terrorist groups but heavy protection has so far prevented major problems. The kingdom is thought to keep some redundancy in its export system as insurance against the disabling of some facilities, according to the EIA. Saudi Aramco refuses to comment on what those options are.
There has been talk of reopening the long Saudi leg of the Tapline to Jordan but it is unclear how quickly a pipeline closed for two decades could be resurrected, and there seems little prospect that the leg across Syria could reopen soon.
Iran (the world’s third-biggest crude exporter), fourth-placed UAE, Kuwait (6th) and Qatar (15th) currently rely entirely on the Strait of Hormuz.
The UAE has been building a new pipeline that will have the capacity to carry the bulk of its production to Fujairah, a bunkering hub and an oil terminal outside the Straits of Hormuz.
The Abu Dhabi Crude Oil Pipeline is expected to have a capacity
of 1.5 million bpd, which could go up to 1.8 million eventually.
Qatar, a small crude exporter, shipped nearly 95 billion cubic meters (bcm) of gas in 2010, according to BP Statistics, of which nearly 76 bcm sailed through Hormuz as LNG.
Another 17.4 bcm was shipped to the UAE via the Dolphin pipeline, which would transport up to 32.8 bcm per year.
Some of the extra gas could be sent to Oman, which already takes about 1.9 bcm from Qatar, freeing up a little more Omani gas for export as LNG. But a lack of pipeline links with export terminals on the eastern tip of Oman means the additional amounts would be insignificant for world gas markets and Qatar.
Nearly 80 percent of Iraq’s crude is exported through Gulf ports, mostly to Asia, and the rest via a 1.6 million bpd pipeline through Kurdistan to the Turkish port of Ceyhan.
There are plans to increase capacity on the northern route by 1 million bpd to help cope with an expected rise in production and reduce reliance on the Gulf ports, which are already running close to capacity, but the existing pipeline has been dogged by a decade of disruption.
The 1.65 million bpd Iraqi Pipeline across Saudi Arabia(IPSA), which has been shut since the first Gulf War in 1991, may again be used to transport crude south to the Petroline. But if Hormuz is blocked, there is little chance any Iraqi crude would find space in Saudi’s only remaining export route.
The 0.7 million bpd Iraq-Syria-Lebanon Pipeline has been unusable since the 2003 war in Iraq but could be fixed.
Iran’s total reliance on crude exports through Hormuz is one of the reasons why it is unlikely to be blocked.
Iran is considering several international oil pipeline projects but does not export LNG, and its pipeline plans have made little progress.
The closure of the Suez Canal, through which around 735,000 bpd of crude passed in 2010, would not be disastrous for crude exports from the Middle East because only around 428,000 bpd sailed north in 2010.
The 2.3 million bpd Sumed pipeline connecting the Red Sea to the Mediterranean, which is 65 percent filled with Saudi, 25 percent Iranian and 4 percent Kuwaiti crude, could accommodate it because Sumed flows have averaged less than 1.l5 million bpd for the last two years thanks to rising demand in Asia, dampened European demand and some ships avoiding the region altogether.
However, the 300,000 bpd of crude that sailed south through the Suez Canal in 2010 would be unable to use the one-way pipeline, while some 1.5 million bpd of gasoline, fuel oil and two huge LNG tankers that use it every day would be blocked because it only transports crude.
The closure of either the Suez or Sumed could be managed by heavier reliance on the other. But a blockage of the 2-mile wide shipping lane between unstable Yemen and mainland Africa would render both of them nearly redundant.
The U.S. EIA estimates over 3-4 million bpd of oil typically sails through the narrow, pirate-infested channel. Its closure would force oil and LNG tankers to sail around the southern tip of Africa, tying up tankers for weeks and driving up costs.
In 2002, a French oil tanker was attacked off the coast of Yemen, an established base for a wing of al Qaeda.
Sources: U.S. EIA, Saudi Aramco World, BP Statistical Review, Reuters News, Sumed website.
Reporting by Daniel Fineren and Humeyra Pamuk, Editing by Jane Baird