Saudi weighs Red Sea pipeline expansion

DUBAI: Saudi Arabia is considering expanding the capacity of its East-West crude oil pipeline to the Red Sea by up to 2 million barrels per day (bpd), potentially allowing the kingdom and neighbouring Gulf producers to export more oil without relying on the Strait of Hormuz, sources familiar with the matter said.
The pipeline, built in the 1980s, has become strategically important following the disruption to shipping through the Strait of Hormuz during the Iran conflict earlier this year. It currently carries up to 7 million bpd of crude from eastern Saudi Arabia to the Red Sea port of Yanbu.
Sources said Saudi Arabia is holding preliminary discussions with neighbouring countries, including Kuwait, on expanding the system. One source said the project could also include a second, smaller pipeline dedicated to refined petroleum products.
The expansion, estimated at between 1 million and 2 million bpd, would require billions of dollars in investment and could take several years to complete, according to people familiar with the plans.
The move comes as Gulf producers seek to strengthen alternative export routes after the conflict exposed the vulnerability of relying on the Strait of Hormuz. During the disruption, around 12 million bpd of Gulf oil production was affected before exports partially resumed following a preliminary US-Iran agreement.
Kuwait Petroleum Corporation Chief Executive Sheikh Nawaf al Sabah said last month the country was discussing with Saudi Arabia ways to expand pipeline infrastructure to accommodate Kuwaiti crude exports.
Analysts said the talks reflect a broader regional effort to improve energy security. 'The recent talks about new pipeline corridors involving Saudi Arabia, Kuwait and Qatar reflect a broader strategic reality,' said Zaid Belbagi, managing partner at Hardcastle Advisory. 'The conflict has focused minds regionally on the perils of relying solely on Hormuz.' — Reuters