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Saudi Arabia Looks To Build Oil Port In Yemen

oil storage

Saudi Arabia may be looking to build an oil port in Yemen’s southeast al-Mahra governorate, where the Saudi-led coalition troops are present, Al Jazeera reported on Monday, quoting sources and a document it has obtained.

Saudi Arabia-based marine construction company Huta Marine has sent a letter to the Saudi ambassador to Yemen in which it thanks the official for the opportunity to submit a technical and financial proposal for the future oil port, according to the document that Al Jazeera has obtained.

The al-Mahra governorate borders Oman, and the border crossing, as well as the seaport and airport in the governorate, is under the control of the Saudi and UAE coalition, which has been fighting the Iran-aligned Houthi rebels in Yemen since 2015.

Earlier this month, Yemen was said to have resumed oil exports.

Despite a worsening humanitarian crisis in Yemen amid a war between the Houthi rebels and a coalition between Saudi Arabia and the UAE, the poorest Arab country has found a way to restart oil production and has even exported the first cargo: 500,000 barrels from a field in the southern Shabwa province bound for a Chinese company, The National reports.

Related: Canada’s Pipeline Crisis Is A Boon For Russia

This is the first outbound shipment of crude oil from Yemen since 2015 when a civil war broke out and quickly escalated into an international conflict. The oil was offered in an open tender, in which 35 companies from around the world took part, the Yemeni ministry of oil and minerals said in a statement.

Now there are plans to restart the rest of the oil fields in Shabwa and neighboring provinces, the secretary to the oil and minerals minister told The Emirati daily. The provinces are under the control of the elected government that the Houthis are fighting as a result of the intervention of the Saudi and Emirati forces.

By Tsvetana Paraskova for Oilprice.com

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  • Mamdouh G Salameh on August 21 2018 said:
    It will be a wise strategic move by Saudi Arabia to build an oil pipeline linking its oil fields in the eastern region of Saudi Arabia with an oil port in Yemen’s southeast al-Mahra Governorate on the Arabian Sea and Gulf of Oman with a capacity of 2 million barrels a day (mbd).

    Such a pipeline along with the 750-mile Petroline (or East-West Pipeline) which runs across Saudi Arabia from the East to the West at the Yanbu port on the Red Sea with a capacity of 4.8 mbd will enable Saudi Arabia to bypass completely the Strait of Hormuz.

    Through the world’s most vital chokepoint, the Strait of Hormuz, 18 million barrels of oil or 27% of oil traffic and a third of global LNG supplies, pass every day. Oil exports from Iraq, Iran, Kuwait, Bahrain, Qatar (including large volumes of LNG exports), the UAE and Saudi Arabia must pass through the Strait. All of them with the exception of the UAE and Saudi Arabia will not be able to export any oil if the Strait of Hormuz is closed or mined.

    Both Saudi Arabia and the UAE have pipelines that circumvent the Strait of Hormuz.
    The UAE has the Abu Dhabi Crude Oil Pipeline, which has a capacity of 1.5 mbd. The pipeline runs from the Habshan onshore field in Abu Dhabi to Fujairah on the Gulf of Oman, bypassing Hormuz.

    Iraq is totally dependent on the Strait of Hormuz for its oil exports since the Iraqi-Turkish pipeline known as the ITP transporting Iraqi oil from Kirkuk to Ceyhan on the Turkish coast on the Mediterranean is currently out of action.

    Kuwait, Bahrain and Qatar have no alternative but to use the Strait of Hormuz. Meanwhile, Iran is building an oil export pipeline on its south eastern coast beyond the Strait of Hormuz expected to be operational by the early 2020s.

    Still, alternative routes to the world’s key chokepoints, namely the Straits of Hormuz, Bab al-Mandeb and Malacca and the Suez Canal are only partial solutions, if at all. A closure of any of the four chokepoints for a lengthy period of time could send oil prices far above $150 a barrel.

    The recent attack on two Saudi oil tanker at the Strait of Bab al-Mandeb by the Houthi rebels in Yemen and the suspension of Saudi oil shipments through the Strait demonstrate how easy to disrupt oil traffic.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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