Saudi Arabia expands pipelines to reduce reliance on Hormuz

• Land routes could carry 10m bpd
• Kuwait and Qatar may join project
• Prince Abdulaziz defends oil and gas

Saudi Arabia’s energy minister has outlined plans to expand the kingdom’s pipeline capacity to protect its oil exports from future disruptions to shipping routes.

Prince Abdulaziz bin Salman said upgrading the East-West pipeline and temporarily converting gas pipelines to carry crude would give the country more export options. Together, these measures would provide pipeline capacity of up to 10 million barrels per day (bpd) within the next two to three years.

When the Strait of Hormuz was virtually closed early in the US-Iran war, Saudi Arabia kept shipping crude by diverting it to the Red Sea through its East-West pipeline, which has a capacity of 7 million bpd.

Prince Abdulaziz said Saudi Arabia was working with state oil giant Aramco to temporarily convert a domestic gas pipeline to carry crude. This could add 1.2 million bpd of capacity within seven to eight weeks. Further investment could raise the pipeline’s capacity to 3 million bpd, he said.

However, the minister said he had told Amin Nasser, Aramco’s chief executive, that the pipeline would need to return to carrying gas by the following summer, when demand for power for air conditioning would surge.

“I told Amin you can use it up to May, but then you have to clean it and we have to get it back to gas because of the summer season,” he said.

Prince Abdulaziz made the comments at the WPC Energy Congress in Riyadh, a major event in the global oil industry calendar and one of Saudi Arabia’s flagship conferences.

Executives from companies including ConocoPhillips, BP, TotalEnergies and ExxonMobil had been due to attend. They were removed from the programme at the last minute after deadly attacks on Riyadh’s airport led to flight cancellations across the country.

Prince Abdulaziz also said Saudi Arabia was upgrading pumping stations on its East-West pipeline, which began operating in the early 1980s. He did not specify how much capacity the improvements could add.

Previous reports suggested the kingdom was also considering expanding the pipeline or building a parallel one along the same route.

“We may end up with 10 million barrels within the next two to three years … that can divert oil to different destinations,” he said.

Prince Abdulaziz also said Kuwait was involved in talks about international pipelines. Saudi Arabia was seeking foreign partners to help own, operate and finance such projects.

On Sunday the kingdom signed a memorandum of understanding with Qatar to explore possible pipeline projects. AGBI reported earlier this month that Saudi Arabia was studying the feasibility of a 1,000km route to Duqm on Oman’s coast.

Further reading:

• ‘Great Gulf pipeline race: which routes will actually be built?
• Saudi Arabia planning Oman pipeline, says Total CEO
• Yanbu attacks expose Saudi oil export vulnerability

Prince Abdulaziz defended investment in oil and gas, saying the obsession with the “religion” of net zero was giving way to a more balanced energy policy that prioritised security and affordability alongside sustainability.

“Saudi Arabia has proven to be an example of how countries should prepare for future eventualities and how countries can put an insurance policy in place,” said Haitham Al-Ghais, secretary general of Opec.

Dave Ernsberger, president at S&P Global Energy, said Saudi Arabia planned “affordable, sensible” investments to give it as many export options as possible. These would “certainly pay back pretty quickly”, he said.

“Building pipelines is remarkably affordable compared to, let’s say, trying to build a fleet of tankers, which is mind-bogglingly expensive right now,” Ernsberger told AGBI.

“The reality is that the kingdom wouldn’t end up using all of these different export capabilities because it wouldn’t need all of them at the same time.

“But it definitely needs to have failovers and redundancies inbuilt into its system.”