On Wednesday, The very Large Crude carrier (VLCC) opened in Fujairah. It was opened to help the UAE and other Gulf countries supply oil securely to other parts of the world and not having to use the Strait of Hormuz.
“The VLCC jetty has the potential to put Fujairah in the top bracket on crude trade front too. It will open up potential to export crude from the Middle East. Pipelines can be laid to bypass the Strait of Hormuz, which can sometimes be affected due to tension in the region” said T. Srinivasulu (director of Gulf Petrochem which owns storage terminals in Fujairah and Sharjah).
Pipelines are expected to be built between Fujairah and other Gulf countries to be able to transport oil to the world evading the Strait of Hormuz.
Currently, there is a 370km pipeline between Habshan and Fujairah and has the capacity to transport 1.5 million barrels per day.
“It (Fujairah port) can become the ‘Make Bulk and Break Bulk’ location for crude in future” Srinivasulu
UAE is one of the largest producers of oil with an average of 2.8 million barrels a day and in a few years they plan on increasing production to 3.5 million barrels per day.
“Geopolitically, it is a hedge against insecurity in the Arabian Gulf and economically, the new jetty builds the oil and gas infrastructure and positions the UAE as a key regional hub for oil and gas industry. Whether the threat from Iran is real or not, it creates a lot of uncertainty among international buyers, shipping companies and insurance companies (which forces them) to look for alternative pathways for transporting crude and the new VLCC pier is a strong pathway.” Kyle Stelma (director of advisory services at Whispering Bell-Dubai based risk management consultancy)