26 July 2020 - 11:00
  • News Code: 305327
Iran Oil Exports No Longer Dependent on Hormuz Strait

TEHRAN (Shana) -- President Hassan Rouhani and Minister of Petroleum Bijan Zangeneh officially inaugurated the construction of a 1,000-km pipeline extending from Goreh to Jask. The pipeline would enable to Iran to carry 1 mb/d of crude oil from Makran export terminal to target markets.

Rouhani said the project was strategic, adding: “Today is the day of assurance for our [oil] buyers. They can be assured that they could buy our oil under any conditions.”

Minister Zangeneh also said that the possibility of delivering crude oil through a channel other than the Strait of Hormuz, would make Iran’s oil export much more secure than neighboring and Middle East fellow exporters.

But why President Rouhani described the Goreh-Jask pipeline as one of the most strategic projects? It’s easy to answer.

Having built this pipeline to export oil, Iran would no longer merely depend on the Strait of Hormuz, and it would enable Iran to carry its oil from the Makran terminal to target markets. That would mean guaranteeing oil delivery supply to buyers against the backdrop of conditions where the Strait of Hormuz has been faced with a variety of threats over the past two years. As a result, oil consumers were thinking of alternative options for that purpose.

Fereydoun Majlesi, expert on international affairs, has said that Iraq and Kuwait are the most dependent nations on the Strait of Hormuz.

“Saudi Arabia also uses the same route for its Eastern destinations. Iran had to take a strategic step to reduce dependence on this chokepoint. Therefore, building this pipeline as well as storage tanks was important,” he added.

Now, with the construction of this route at a time its petroleum industry is hit with tough sanctions, Iran is assuring its oil buyers that they can rely on this country and buy Iran’s oil safely.

Explaining about the strategic aspects of the Goreh-Jask pipeline, Rouhani said: “Many countries in the region have found an alternative for their oil exports in order to be able to export their oil when the Strait of Hormuz is threatened.”

“Although we control the Strait of Hormuz, we have a problem that if this strait was to be closed for whatsoever reason, its oil exports would be halted and Iran would face problems. Now, we have overcome this problem,” he said.

Rouhani said the line was important in terms of economy, national security and energy.

He added: “Therefore, it would give assurances to our buyers.”

Jask to Export Oil Early 2021

The Goreh-Jask line is 1,000 km long, starting from Goreh in the southern Bushehr Province. It will cut through Fars Province and Hormuzgan Province before reaching Jask, the Makran terminal and finally Kharg.

There are 20 oil storage tanks with capacity of about 10 million barrels, a terminal, several single-point moorings, power plants, water desalination plants, access roads as well as industrial infrastructure in Makran and Jask. That would allow the delivery of 1mb/d of heavy crude oil from oil-rich areas and accommodate very large crude carriers with capacity of two million tonnes.

The export terminal would bring Iran closer to its export markets in China, India, East Asia, Europe and Africa, reducing export costs.

It would be also possible to make arrangements for swapping crude oil and petroleum products with Caucasus, Central Asia and Russia.

Javad Yarjani, Iran’s former OPEC national representative, said were it not for oil sanctions, the terminal would be instrumental in facilitating Iran’s oil exports particularly towards East.

Zangeneh said the capital needed for the project was estimated between $800 million and $850 million, adding that oil exports from the Jask terminal would start by early next year.

Domestic Manufacturing

Iran’s Petroleum Ministry embarked on this project under the Rouhani administration while the United States re-imposed sanctions on Iran’s petroleum industry after pulling out of the 2015 nuclear deal. The sanctions prompted many foreign companies to leave Iran.

Consequently, equipment shortages were felt in Iran because there was no experience in the manufacturing of some equipment. Therefore, National Iranian Oil Company (NIOC) decided to push ahead with the project without foreigners and only by reliance on domestic manufacturers.

Zangeneh said some equipment in this project had been manufactured for the first time in Iran.

“Contracts had been signed with foreign companies for manufacturing such equipment as slabs used in pipe building. As soon as sanctions were back in place, the contracts were terminated. However, during a ten-month period, Mobarakeh Steel Mill, following hard efforts made Khuzestan Oxin Steel Co. managed to build slabs and billets respectively,” he said.

Zangeneh said the Mobarakeh mill manufactured and delivered 320,000 tonnes of slabs while Khuzestan Oxin Steel delivered 250,000 tonnes of billet. He added that pipe manufacturers had built 440 km of pipeline, 350 km of which had been delivered to sites to be welded.

The minister said 50 giant pumps with capacity of 2.5MW were needed in the project.

Noting that such pumps had not been built in Iran before, he said: “For the first time, manufacturing of these pumps was assigned to three domestic companies for $50 million.”

Zangeneh said that five pumping stations were also under construction in addition to the pumps.

“Twenty tanks with capacity of 500,000-barrel storage are under construction in the Jask area by the private sector under BOT agreements and the agreement for the oil export terminal utilities has been signed,” he added.

Jask Terminal 40% Complete

Zangeneh said the Jask export terminal was 40% complete, adding: “Over the past two months the bulk of progress in this project has been made, 7% per month. It is valuable and we hope that this project would be completed this year to allow for exports.”

Referring to a 600,000-barrel to 700,000-barrel condensate pipeline connecting to the Persian Gulf Star Refinery, he said: “By connecting these two lines, it would be possible to carry gas condensate via Jask if need be.”

Highlighting the significance of the Jask terminal project, Zangeneh said: “By implementing this project, in addition to an export terminal, a development hinterland would be created in the Gulf of Oman.”

The minister said $300 million had so far been invested in the project, adding that another $850 million was needed.

“There are of course obstacles and problems, some of which have been overcome. The remaining finance would be guaranteed through capital market so that the project would be completed in due time,” said Zangeneh.

He expressed hope that oil exports would begin from the Jask terminal, as the most strategic project of the Rouhani administration, early 2021.

Reza Dehqan, deputy head of NIOC for engineering and development, said Iranian services and equipment accounted for more than 95% of the Goreh-Jask pipe project.

He said that five pumping stations, three pigging stations, 10 power supply posts, 400km of electricity transmission lines, 3 SPMs, 40km of undersea pipeline and 20 crude oil storage tanks were envisaged in this project, all of which being handled by Iranian contractors and consultants.

“Currently, more than 800 heavy machines and 5,000 service workers are involved in this project and everything is in compliance with health protocols,” he added.

Courtesy of Iran Petroleum

News Code 305327

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