Recent announcement of Iran exporting her oil from outside Persian Gulf ports is a tantalizing news. Persian Gulf in general and Strait of Hormuz in particular could function as chokepoint for her and equally for her enemies.
Bypassing Strait of Hormuz is not an easy task. More than 90% of Iranian oil exports are routed through Kharg Island oil terminal that can be interdicted by alien navies. This is a two way sword. Iran can also hit back by closing her side of the narrow Strait whose ownership is shared by both Oman and Iran. At the narrowest point the Strait is only 33 km wide and mainly on the Iranian side!
Technically both Oman & Iran own the Strait equally. The attempts by USA to make it an international waterway has failed due to objections from both Oman & Iran. Yet another crucial point is the Strait of Hormuz is located at the juncture of the Persian Gulf and the Gulf of Oman. Neither Oman nor Iran would agree to any alteration of the status or ownership of the Strait.
Business strategy
of Iran as regards to her oil export has to calibrate with judicious
use of ports as well as pipeline. At present most pipelines link Kharg Island terminal
and a cluster of other small ports in the Hormozan Province in the south-west
Iran. Incidentally all are linked to the Persian Gulf.
If Iran has to proceed with the use of ports outside Persian Gulf she has to cough up heavy capital expenditure for laying of pipelines. According to S&P Global the 1,000-km pipeline Known as Goureh-Jask route costing over US$ one billion will bring oil from the Southern Bushehr province to the Iranian coast washed by Sea of Oman. At present the quantum is just above one million barrels but could be expected to go up to 10 million barrels of crude.
Although it is just a minuscule, in the longer term Iran need to diversify export of oil not only from the Gulf of Oman but from the Arabian Sea as well. Chabahar Port is one such well known ports and many many others could be built provided Iran can marshal huge amount of finance. Iran, however, is determined to do that come what may!
Cheers!
Muthu Ashraff Rajulu
Business Strategist
Mobile: + 94 777 265677
E-mail: cosmicgems@gmail.com
Blog: Business Strategist
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