Overview of Mideast hydrocarbon pipelines 2017

The Middle East is known for the abundance of hydrocarbon resources and thus oil & gas pipelines have become an integrative part of the landscape. Practically every country in the Middle East has constructed some kind of pipeline infrastructure for internal purposes or connecting it to a neighbour, with multiple more such projects being planned at various levels, beginning with various hypothetical pipelines in the Gulf, continuing with export pipelines from Cypriot Aphrodite and Israeli Leviathan and ending with grandiose trans-continental projects, such as Nabucco. However, it must be said that most of such international projects are not likely to be realized in the coming future and ironically many past interstate pipeline projects have proven that the promises of tremendous profits from pipelines often fail to stand to the geopolitical circumstances of the region and financial obstacles.

From the very beginning, the pipeline business in the Mideast has been a gamble. For example, the Mosul-Haifa oil pipeline, constructed by the British in 1935 in order to transport oil from British-protected Kingdom of Iraq to British Mandate Palestine-EY via British protectorate of Transjordan, had operated for just 13 years. Though in the beginning the whole pipeline seemed to operate in the seemingly stable British domain, the post-World War II developments made all those three countries independent and increasingly unstable. As another example, the Trans-Arabian oil pipeline, running from Saudi Arabia to Lebanon via Transjordan and Syria, had operated for 17 years, failing to continue due to financial disputes. Perhaps only the Kirkuk-Banias oil pipeline is an example to successfully surpass five decades of continuous operation, though eventually terminating due to the 2003 Gulf War.

Considering the currently ongoing turmoil in the Mideast, there is absolutely no insurance for pipeline operational stability. There have been multiple disruptions in the Arab Gas pipeline (AGP) Rehab branch from Egypt to Jordan over the past six years, with its current operation capacity standing at roughly 25% and in fact most of the branches of the Arab Gas pipeline have become defunct. Furthermore, most pipelines passing via Eastern Turkey have become targeted by insurgents during the ongoing PKK rebellion in that part of the country, sporadically terminating the flow. The Kirkuk-Ceyhan oil pipeline (KCP) Mosul-Kirkuk branch was seized by IS Jihadists and terminating the flow, while the alternative Taqtaq-Peshkhabur branch has already been attacked at least once.

During 2016, several Mideast pipeline projects have progressed in planning and construction, most notably the planning and construction of gas pipeline from Iraqi Kurdistan to Turkey, agreement on gas pipeline from Israel to Jordan, progress on Turkish Stream gas pipeline and discussions over possible Iraqi Kurdistan-Iran oil pipeline. On the other hand, potential gas pipeline projects from Israel to Turkey, from Israel to Egypt, from Israel to Cyprus and the notorious Nabucco have shown little progress.

The calculation of pipeline lifetime in this study was changed, by combining the operating and partially operating pipeline lifetimes into a single category, but adding a normalized figure for operation - lifetime multiplied by available capacity. The above presented statistical analysis was added this time with the Habshan-Fujairah oil pipeline, which was omitted in our 2016 Mideast pipeline report, even though it was inaugurated in July 2012. Due to de-facto disbandment of Kazi Magomed-Abadan pipeline in 1979 and later establishment of alternative swap deal via Salmas-Nakhichivan pipeline, the issue was clarified from previous report.

The conclusion from statistical analysis of pipelines is that eight inter-state Mideast hydrocarbon pipelines, which have already terminated operation, had been in use for a median lifetime period of 11 years (both absolute and normalized). Furthermore, looking at the fourteen currently operating inter-state hydrocarbon pipelines in the Mideast, it appears that their median operation lifetime to date is 11 years as well (both absolute and normalized), though since those are now operational - their lifetime could extend somewhat longer. Despite, several corrections and additions in data, this outcome is similar to the results of the previous 2016 Mideast hydrocarbon pipeline assessment published by LNRG Technology last year. While one can certainly assert that those statistics are somewhat non-representing, since most pipelines in the region have been inaugurated over the past two decades, there is still an interesting trend arising. In conclusion, numerous geopolitical factors and global financial factors may turn the still operating hydrocarbon pipelines into idle pieces of metal in the Mideast deserts and it looks like 11 years lifetime is difficult to surpass.

The extended commercial report can be purchased at LNRG Technology digital store (below).