Exporting Gulf oil through Yemen’s ports on the Arabian Sea: Obstacles and opportunities

Published on 9 April 2012 in Business
Aish Awas / [email protected] (author)

Aish Awas / [email protected]


Over the last few years, there has been some faint talk of intentions on the part of the GCC states to vary the routes they use to transport their oil exports to the world market.

This change in oil exporting ports outside the Arabian Gulf is intended to diminish dependence on the Strait of Hormuz, through which approximately 88 percent of the Gulf’s oil exports is transported to Asia, Europe and the USA, and to reduce the risks that the Gulf states may face in case this strait is closed, especially if the American-Iranian dispute over the nuclear program reaches a point of military conflict and confrontation.

In this connection, it is rumored that Yemen’s sea ports represent one of the alternative outlets before the GCC states and that there is serious thinking on the part of the Gulf states to construct two pipelines for transporting their oil exports through Yemen.

The first is called the Gulf Pipeline; it runs from Kuwait across the territories of Saudi Arabia, Emirates and Oman southward to the shores of Hadramout in Yemen.

The second pipeline will be built to transport oil from the world’s largest oil station at Ras Tanura to the east of Saudi Arabia to the oil exporting facilities on the shore of Hadramout on the Arabian Sea coastline.

Regardless of the sources or credibility of the information stated above, such a great project stands a huge chance of success in principle, not because it is a feasible idea but rather because it is in both sides’ interest.

In other words, Yemen would make generous profits that may amount to millions of dollars as duties for allowing the oil pipelines to run across its territories; the GCC states would, in return, have a safe pipeline to transport part of their oil exports, and they would also consolidate their position against any security threats in the Gulf and the Strait of Hormuz.

Furthermore, the project would act as a catalyst for developing cooperation mechanisms, boosting mutual trust between Yemen and the Gulf states, and deepening common interests.

Actually, it would be a significant step toward Yemen’s fully joining the GCC and away from past disputes and negative legacies.

What more boosts our optimism in this respect is the fact that Yemeni-Saudi and Yemen-Omani border disputes, which would have been real barriers impeding the project implementation, have been settled years back with the conviction and satisfaction of all parties.

In addition to all this, the project is going to be in the vital interest of all superpowers in America, Asia and Europe, providing them with new and safe ways to transport the Gulf oil at less cost and faster speed, as the distance between the Yemeni seaports and the consuming states in Europe and East and South Asia is relatively shorter than that between these consuming states and the oil exporting facilities in the Arabian Gulf.

Thus, it is expected that these superpowers would encourage this project and help it come into existence.

However, there are, at least for the time being, certain obstacles that may prevent the project’s implementation. The most noticeable ones, of course, lie in the concerns and mistrust between the concerned parties. Thus, how can these concerns be overcome and dispelled?

Theoretically speaking, there are three alternatives to the problem. The first is that every government should be responsible for protecting and funding the part of the pipeline within its national boundaries.

But, the problem remains that some governments, particularly Yemen’s, do not have sufficient financial resources to fund such a mammoth project.

The second alternative is that the Gulf states undertake funding and implementation of the whole project, even the part within Yemeni territories, and they should be granted a payback after the termination of which Yemen can regain the ownership rights of the part within its national boundaries providing that the Yemeni government rents the pipeline out to the Gulf states in return for certain agreed upon duties.

It is expected that this proposal would face some reservations on the parts of some parties.

The third alternative is that a shareholding company should be entitled to run, operate and safeguard the oil pipelines and tankers.

This company should be funded and shared by Yemen, Saudi Arabia and other Gulf states and international oil companies that would benefit from the project. This alternative is the best of the three, as it ensures the implementation of the project and dispels all concerns and doubts.

Aish Awaws is Strategic Studies Program Manager at the Sheba Strategic Studies Center in the capital Sana’a.

Source: www.shebacss.com