Prospects for pipeline construction look good in middle east.

Author:Newman, Nicholas


Excluding countries plagued by war and civil disturbances, such as Syria, Libya and Iraq, the prospects for pipeline construction in the world's leading oil and gas producing region are looking good.

Latest industry figures suggest the countries that make up the Gulf Cooperation Council will need to order at least 5.3 million tonnes of steel piping in the next five years, which is valued at about US$ 7.2 billion. In the Middle East, reports of plans to improve export capacity to neighboring regions, such as a proposal to link Iran via Oman with India, as well as expansion of the Saudi oil and gas grade to satisfy its growing cities, fill the news.

Pipelines in the region are being built, as always, because of demand. In the past, pipeline construction was primarily determined by the West's demand for oil and gas. This is no longer the case, since Asian markets have become the leading market for Middle Eastern energy resources.

In fact global demand for oil and gas is expected to increase by 35% between 2010 and 2040, according to a 2014 ExxonMobil report, "The Outlook for Energy: A View to 2040." This rise in demand will drive pipeline construction for decades as will future new sources of supply.

Here is a snapshot of some industry activity in the region:

Iran--For many years, the nation faced United Nations sanctions on oil exports, which discouraged development of new export pipelines. The current warming of relations offer encouragement to Iran's ambition to export gas by pipeline to new markets in Europe and Asia.

One such project is the proposed 1,400 km Iran, Oman to India (IOI) pipeline, using technology pioneered in the North Sea, at a reported cost of $5 billion. The IOI would source its gas from Iran's off-shore South Pars gas field located near Qatar, before crossing the Arabian Sea to India. The pipeline would carry 31 million cubic meters of gas per day (MMcm/d). Preliminary studies are underway, according to The Times of Oman.

Oman--The nation announced in February it plans to build a gas pipeline to import Iranian gas for domestic use and as feedstock for its new LNG export terminals at Qalhat Sur. In August 2013, Oman signed a memorandum of understanding with Iran on a natural gas import contract. If realized, it would be a $60 billion, 25-year supply deal, beginning in 2015. It will connect the two countries via a pipeline under the Gulf of Oman.

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