TotalEnergies the company plans to invest in two oil corridors that will allow for the transport of more crude oil from the Middle East via alternative routes to the Strait of Hormuz. The French company will support the expansion of the Fujairah-Abu Dhabi route and participate in a project to transport Iraqi oil through Syria to the Mediterranean. Both initiatives aim to reduce dependence on this strategic maritime route for global crude oil trade, Patrick Pouyanné the CEO of TotalEnergies confirmed the plans during the ONS energy conference held in Norway. The company has not yet announced the amount it will allocate to the investments or its stake in each project.
TotalEnergies is committed to expanding the Fujairah oil pipeline
On one hand, TotalEnergies will participate in the expansion of the oil infrastructure connecting Abu Dhabi with Fujairah. The system provides an outlet to the Gulf of Oman, allowing oil to be exported without crossing the Strait of Hormuz currently, the Habshan-Fujairah pipeline can transport up to 1.8 million barrels per day from the Abu Dhabi oil fields. Its location makes this infrastructure an alternative route for shipping crude oil to international markets.
In this context, Abu Dhabi seeks to increase its export capacity through Fujairah, the expansion takes on special importance given the maritime traffic disruptions in Hormuz and the need for corridors capable of maintaining the flow of oil. Pouyanné confirmed that TotalEnergies will invest in doubling the Fujairah pipeline, although he did not specify the amount of capital committed.
An oil pipeline would connect Iraq to the Mediterranean
On the other hand, TotalEnergies plans to become a partner in an oil pipeline that would transport crude oil from Iraq through Syria. The infrastructure would allow Iraqi oil to reach the Mediterranean directly, offering Baghdad an alternative to the terminals in the southern Persian Gulf, through which a large portion of its oil exports currently flow.
Estimates for the initiative place its cost at around $15 billion, its construction could take at least four years. The Iraq-Syria corridor would thus add another outlet for the region’s crude oil and reduce exporters’ exposure to disruptions in the Strait of Hormuz.
The Strait of Hormuz drives new oil routes
In turn, the strategy responds to the weight that Hormuz has in the international energy system, before the recent disruptions, it accounted for around a fifth of the world’s energy supply, oil it was passing through this maritime route. The concentration of exports in such a narrow corridor poses a risk to producers, marketers, and buyers when restrictions are placed on ship traffic.
For TotalEnergies, having alternative routes also has a commercial dimension, the company maintains a significant presence in the trade of oil from Iraq and Qatar, which increases its exposure to any prolonged disruption of regional shipping. Therefore, the investment in Fujairah and the Iraq-Syria corridor aims to strengthen land-based options for transporting crude oil to two different outlets: the Gulf of Oman and the Mediterranean.
Likewise, these projects show how the security of export routes is gaining importance within the investment decisions of large energy companies.
Source: Oil Price
Photo: Shutterstock
