Saudi Arabia intends to increase its oil pipeline capacity by 40% to export oil without passing through the Strait of Hormuz. This decision comes after Riyadh has heavily relied on the main pipeline in its war with Iran.
Increase in Oil Export Capacity
Abdulaziz bin Salman, the Saudi Minister of Energy, announced at the Global Energy Congress in Riyadh that the country aims to increase the capacity of pipelines away from the Persian Gulf to 10 million barrels per day within the next two to three years. This plan is aimed at ensuring the continuation of oil exports amid the critical conditions in the Middle East.
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The main and national pipeline of Saudi Arabia, which has played a key role in maintaining supply to the market during the war, can currently pump up to 7 million barrels of oil per day. According to the Minister of Energy, the state-owned company Aramco can add 1.2 million barrels to the country's crude oil export capacity within the next seven to eight weeks by repurposing existing natural gas pipelines.
Negotiations with Neighbors and War Damages
The Saudi Minister of Energy also announced the exploration of new export routes as part of international cooperation, noting that the country is currently in negotiations with neighbors such as Kuwait. Saudi Arabia and its other neighbors in the Persian Gulf are facing challenges regarding oil prices and infrastructure damages due to ongoing crises in the Middle East.
Recent attacks on airports in Saudi Arabia have resulted in the deaths of more than 12 people. In this context, the Minister of Energy emphasized the importance of resilience, stating, "The foundation of crisis response is strengthening resilience and creating diverse options."
Amin Nasser, CEO of Aramco, in a separate speech emphasized the company's determination to increase export capacity at Red Sea ports and announced the exploration of new export routes and the development of international storage capacity.
Oman, as the only country in the Arabian Peninsula with most of its ports outside the Strait of Hormuz, has expressed its readiness to host the endpoint of the pipelines. Meanwhile, the state-owned Oman Energy Investment Company is constructing and developing storage tanks at the Duqm port located along the Arabian Sea.
The East-West pipeline helped the Saudis maintain 70% of their normal export flow during the early months of the war and the relative blockage of the Strait of Hormuz. Although an attack last month temporarily halted operations on this line, Aramco quickly repaired the damages.
Abdulaziz also noted that using the gas pipeline for crude oil transportation would be temporary and would need to be emptied and cleaned afterward to be used again for supplying gas to the domestic network in the summer season. Saudi Arabia, in collaboration with Aramco, is seeking to create dual-use capability for this pipeline so that with the installation of pumping stations and suitable compressors, the transportation of oil or gas can be made possible depending on the conditions.
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