Reuters reported that Saudi Arabia has reopened an old oil pipeline built by Iraq to bypass Gulf shipping lanes; giving Riyadh scope to export more of its crude from Red Sea terminals should Iran try to block the Strait of Hormuz.

Industry sources said that the Iraqi Pipeline in Saudi Arabia, laid across the kingdom in the 1980s after oil tankers were attacked in the Gulf by both sides during the Iran and Iraq war has not carried Iraqi crude since Mr Saddam Hussein invaded Kuwait in 1990.

Saudi Arabia confiscated the pipeline in 2001 to compensate for debts owed by Baghdad and has used it to transport gas to power plants in the west of the country in the last few years.

Iran in January threatened to block the Strait of Hormuz in retaliation for US and European sanctions that target its oil revenues in a bid to stop Iran's nuclear program.

A European Union ban on Iran's oil starts on Sunday and Israel has threatened military action against Iranian nuclear facilities if Iranian talks with Western powers fail to stop uranium enrichment.

Several sources with knowledge of the project said that alarmed, Saudi Arabia has now quietly reconditioned IPSA to carry crude, test pumping along the line over the last four to 5 months.

An industry source in Saudi Arabia said that the testing started because Saudi Arabia wanted to secure alternative routes to export oil. Western industry sources said the tests through the 1.65 million barrel per day line had delivered into storage facilities at Mu'ajjiz near Yanbu on the Red Sea for at least 4 months.

More than a third of the world's seaborne oil exports pass through the narrow Strait of Hormuz from the oilfields of Saudi Arabia, Iran, Kuwait, Iraq, the United Arab Emirates and Qatar. Qatar's liquefied natural gas exports are all shipped through Hormuz.

Source - Reuters

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