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                                        Volume. 11918

Oman’s $3b railroad plan to re-route Persian Gulf
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Oman, which faces Iran across the Strait of Hormuz, said it’s poised to start raising cash for a $3 billion rail line offering an alternative route for oil and freight shipments that funnel through the 21 mile-wide channel, Bloomberg reported.
The nation of 3.3 million people, located on the southern side of the strait, is considering issuing bonds by the end of 2014 to kick-start funding for the track across some of the Arabian peninsula’s harshest terrain, Abdulrahman Al Hatmi, a director at Oman National Railway Co., said in an interview.
 
Al Hatmi said the “very expensive” rail line is more than justified by the new trade opportunities bypassing the Hormuz waterway would offer Oman’s southern port of Salalah.
 
Oman wants to push on with its leg of the so-called Persian Gulf Cooperation Council Railway due to stretch 1,350 miles from the borders of Iraq to the shores of the Indian Ocean by 2018 just as nations including Kuwait -- which have less to gain from the project -- say they’ll struggle to meet agreed deadlines.

Obstacle course
 
Oman has signed a 13.6 million rial ($35 million) deal for design work with Italferr SpA, the engineering arm of Italy’s state railway. Awards to construction companies will take place by the end of this year, with work commencing by the first quarter of 2015, Al Hatmi said.
 
Rather than hugging the coast to reach Oman, the line will take the shortest route east from Abu Dhabi on the Persian Gulf, crossing the border from the United Arab Emirates near the city of Al Ain before plowing for 100 miles through the Hajar Mountains, which rise to 10,000 feet, and reaching the ocean near Suhar, 150 miles north of Omani capital, Muscat.
 
The terrain makes the leg the most challenging of the PGCC line and the bill may be higher than the current estimate, according to Al Hatmi, who said studies are under way to pin down the final cost. From Muscat, Oman wants the line to continue south across its arid interior to the ports of Duqum and Salalah, ending at the border with Yemen, he said.
 

Chokepoint
 
By circumventing the Strait of Hormuz the railway would dilute the impact of further closure threats to a waterway through which some 20 percent of crude supplies pass to reach global markets, equal to 35 percent of seaborne traded oil, according to the U.S. Energy Information Administration.
 
About 17 million barrels of oil passed through the channel each day in 2011, almost five times the total for the Suez Canal, the next busiest chokepoint, the EIA estimates.
 
The line’s scope for serving as an alternative route for crude exports will be determined by its proximity to oil fields and loading terminals and a need for thousands of tanker cars, according to Robin Mills, head of consulting at Manaar Energy Consulting & Project Management in Dubai, who said the link may come into its own in an emergency lasting at least six months.
 
Other means of bypassing the Strait of Hormuz include a 263-mile pipeline stretching from Abu Dhabi to the emirate of Fujairah on the Indian Ocean, built at a cost of $4.2 billion. A second pipe carries Saudi oil from the Persian Gulf across Arabia to the Red Sea, though the two routes could carry only a fraction of ship-borne crude capacity.
 
(Source: Bloomberg)
 

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