The strategic Strait of Hormuz

July 23, 2007
The Strait of Hormuz is the world’s premier oil transportation choke point, and it seems worthwhile from time to time to recite the details that make it so strategic.

The Strait of Hormuz is the world’s premier oil transportation choke point, and it seems worthwhile from time to time to recite the details that make it so strategic.

Energy markets took a deep breath in June when Cyclone Gonu passed over the area with little disruption, but it is political-not natural-forces that give the strait its importance.

So, with help from US Energy Information Administration researchers, here goes.

The Strait of Hormuz is a body of water 600 miles long that provides the only water outlet for the Persian Gulf. The strait lies between Iran and Oman and several of the United Arab Emirates. Hormuz’s length includes the Gulf of Oman, which connects the strait with the Arabian Sea.

The strait is 34 miles wide at its narrowest point. It consists of two 2-mile channels for inbound and outbound tankers separated by a 2-mile buffer zone.

The Persian Gulf countries of Saudi Arabia, Iran, Iraq, Kuwait, Qatar, the UAE, and Bahrain exported 18.2 million b/d in 2006, including 17 million b/d via the strait. This represents one fifth of global oil supply.

OGJ figures show these countries with 728 billion bbl or 55% of world proved reserves.

More than 3.5 bcfd of natural gas transits the strait on LNG tankers enroute to Asia, Europe, and North America.

Gross oil imports to Organization of Economic Cooperation and Development nations from Persian Gulf countries averaged 10.4 million b/d or 31% of OECD imports in 2006, and US gross oil imports from the Persian Gulf were 2.2 million b/d or 17% of US imports in 2006.

The rest of the Persian Gulf exports went by pipeline through Turkey to the Mediterranean and via Saudi Arabia to the Red Sea.

Alternate routes

Several Middle Eastern oil-producing countries have built pipelines in the past along routes that avoid the Strait of Hormuz, but most of these are in disuse due to geopolitical or economic issues.

The 745-mile, 5 million b/d East-West Pipeline traverses Saudi Arabia from Abqaiq on the Persian Gulf to Yanbu on the Red Sea. It is used at less than half capacity.

The 290,000 b/d Abqaiq-Yanbu natural gas liquids pipeline, parallel to the East-West crude line, is due for upgrades to 555,000 b/d in 2008. It serves Yanbu’s petrochemical plants.

The Trans-Arabian Pipeline, or Tapline, from Qaisumah, Saudi Arabia, to Sidon, Lebanon, was mothballed in 1984 due to turmoil in Lebanon and economic reasons. Its operating capacity is believed to be 50,000 b/d against a design capacity of 500,000 b/d.

The Iraqi Pipeline through Saudi Arabia, or IPSA, extends from southern Iraq through Saudi Arabia and parallels the East-West Pipeline to the Red Sea north of Yanbu. It was closed in August 1990 after Iraq invaded Kuwait. Saudi Arabia expropriated it in June 2001 and converted it to transport gas to Yanbu, but it could be used to move 1.65 million b/d of oil.

Iraq built the twin bidirectional Strategic Pipeline in 1975 to allow shipment of Rumaila crude through Turkey and Kirkuk crude via the Persian Gulf. Work on the second pipeline ceased during the 1990-91 Gulf War. The first pipeline needs rehabilitation.

The dual 600-mile Iraq-Turkey pipeline from Kirkuk to Ceyhan, Turkey, has operated sporadically for years. Capacities are 1.1 million b/d and 500,000 b/d, but major repairs and upgrades are needed.

The twin Iraq-Syria-Lebanon Pipeline (ISLP) from Kirkuk to Banias, Syria, hasn’t been used since 2003. Iraq used it to ship 200,000 b/d from southern Iraq to Syrian refineries in 2001-03. Combined capacity is 700,000 b/d.

The future

EIA projects Persian Gulf oil production to grow moderately from 23 million b/d in 2006, reaching 26 million b/d by 2015, nearly 30 million b/d by 2020, and more than 38 million b/d by 2030.

This could increase the share of Persian Gulf oil production to 33% of the world total by 2030, up from 28% in 2006.

Meanwhile, another pipeline is proposed to bypass the strait on the south.

China National Petroleum Corp. said Abu Dhabi International Investment Co. awarded a contract to CNPC’s two pipeline E&C units to jointly build a 360-km, 48-in., 1.5 million b/d pipeline from Habshan onshore oil field in Abu Dhabi to an export terminal in Fujairah on the Gulf of Oman, bypassing the Strait of Hormuz. One third of the oil would be processed in a refinery to be built in Fujairah (OGJ Online, June 4, 2007).

Starting and completion dates were not given for the pipeline, which would carry about 55% of UAE production.