Overview of Mideast hydrocarbon pipelines 2019

The Middle East is known for the abundance of hydrocarbon resources and thus oil and gas pipelines have become an integrative part of the landscape. Almost every country in the Middle East has constructed some kind of pipeline infrastructure for internal purposes or connecting it with a neighbour, with multiple more such projects being planned at various levels, beginning with various hypothetical pipelines in the Gulf, continuing with potential export pipelines from Cypriot and Israeli gas fields and ending with grandiose trans-continental projects, such as Nabucco. However, 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 Mandatory Palestine via British-protected Emirate of Transjordan, had operated for just 13 years, terminating upon British withsrawal from the region post-World War II. In 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. The Kirkuk-Banias oil pipeline had successfully surpassed five decades of continuous operation, though eventually terminating due to the 2003 Gulf War. Perhaps only the A-B oil pipeline from Saudi Arabia to Bahrain is an example of true long-term stability, running almost continuously from 1945.

This study aims to analyze the up-to-date operation statistics of Mideast oil and gas pipelines with emphasis on inter-state midstream projects in order to assess the long-term financial feasibility of such projects and their correlation with regional geopolitical stability. Despite stabilization during the past four years, there is little certainty yet for long-term pipeline operational stability in the region, considering the persistent turmoil. There have been multiple disruptions in Rehab branch of Arab Gas pipeline (AGP) from Egypt to Jordan over the past seven years, with partial operation capacity at present, whereas other branches of the AGP have meanwhile become defunct. Furthermore, pipelines passing via Eastern Turkey have become targeted by insurgents during the ongoing PKK rebellion, sporadically terminating the flow. The Mosul-Kirkuk branch of the Kirkuk-Ceyhan oil pipeline (KCP) was sabotaged by Jihadists in 2013 and had terminated the flow until Iraqi return in 2017, while the alternative Taqtaq-Peshkhabur branch running through the Kurdish region has already been attacked at least once. More recently, the A-B oil pipeline was attacked in November 2017, temporarily terminating the flow.

Table 1. The median lifetime of operating and disbanded inter-state Mideast pipelines. The median period of operation for disbanded pipelines for 2018 is 11 years (absolute and normalized), while for currently operating pipelines the median operation lifetime is 12 years (absolute and normalized).

During 2018, several Mideast pipeline projects have progressed in planning and construction, most notably the planning of gas pipeline from Iraqi Kurdistan to Turkey, construction of the second Israeli-Jordanian gas pipeline, completion of the Russian-Turkish TurkStream gas pipeline, completion of Turkey-Bulgaria Interconnector (TBI), completion of TANAP, progress on new A-B oil pipeline and discussions over possible Iraqi Kurdistan-Iran oil pipeline. On the other hand, potential gas pipeline projects from Qatar to Turkey, Israel to Egypt, Israel to Cyprus, Cyprus to Europe and the Nabucco project from Turkey to Europe have shown little progress.

The calculation of inter-state hydrocarbon pipelines lifetime in this study is combining the operating and partially operating pipeline lifetimes within a single category, but normalizing it by lifetime multiplied by available capacity. The above presented 2019 statistical analysis includes correction of AGP-Ashkelon branch operation lifetime, due to Egyptian export renewal in late 2018.

Figure 2. Mideast Pipelines Index calculated from lifetime of operating and disbanded pipelines. Rise of the Index implies increasing regional instability, while decline into negative area implies stability and positive economic and geopolitical climate.

The outcome of 2019 analysis is that eight inter-state Mideast hydrocarbon pipelines, which had already terminated operation, had been in use for a median lifetime period of 11 years. Furthermore, looking at the nineteen currently operating inter-state hydrocarbon pipelines in the Mideast, it appears that their median operation lifetime to date is 12 years. As for the currently operating inter-state pipelines - their lifetime could extend somewhat longer if no disruptions occur. This outcome is similar to the results of the previous Mideast hydrocarbon pipeline assessment published 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 – showing that while 11-12 years inter-state pipeline lifetime is still a challenge, the current Mideast Pipelines Index implies regional stability for the near future.

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