While it is generally known that the Middle East is a repository of the largest reserves of oil in the world, knowledge of the ways this oil is exported to reach its ultimate consumers is rather limited or restricted to the professionals in the oil industry, certain government and military agencies, and a small number of specialized scholars and economists.
A good number of Arab countries in the Middle East and North Africa as well as Iran produce substantial quantities of oil for export. With the dissolution of the Soviet empire, certain states of Transcaucasia and Central Asia have joined the ranks of sovereign oil and gas producers. These states constitute today an outer periphery of the Middle East, but because of their limited or merely potential role in the international oil traffic only passing references will be made to them in this paper.
The Middle East is crisscrossed by a multitude of pipelines. The purpose of this paper is to present a broad picture of principal pipeline systems that we may call "major" because of (a) their magnitude or importance to the economies of the producing states and (b) the fact that they traverse foreign lands and territorial waters. The main focus will be on crude-oil pipelines. There are also pipelines carrying oil products or gas, but, because (with perhaps one exception) they are of lesser significance, they will not claim special attention in this paper. It should also be borne in mind that producers of oil have in some cases a choice between utilizing pipelines plus tankers and relying mostly on tankers. Decisions about which export method to employ are dictated partly by economic and partly by political considerations.
Basically there exist in the Middle East two major pipeline systems: the Iraqi and the Saudi Arabian. The Iranian system in strategic terms is limited to a gas pipeline linking Iran with the territory of the former Soviet Union. Once the rich Kazakhstan oil fields at Tengiz northeast of the Caspian Sea are developed into full production, pipelines carrying their oil may join the Iraqi and Saudi ones as the third major system. Deliberations regarding the proper export routes are already claiming the attention of the oil industry.
The basic carrier of oil to remote foreign destinations is a tanker. Tankers vary substantially in their loading capacity, their technological innovations and-depending on their origins, modus operandi and ownership-their reliability. In earlier times, tankers were frequently chartered by oil companies on longer or shorter leases. Later, especially in the 1970s and 1980s, oil companies began to develop their own modem tanker fleets, Japan being a leading builder on this kind of ship. More recently, in their general drive to control the flow of oil from the well to the gas station, certain oil-producing states began acquiring their own tankers. But, oil must reach the maritime terminal by pipeline before it is loaded on a tanker. Then, once filled with oil, the tanker must be directed along the most economical route to the unloading terminal. What is at stake here is a combination of factors: the length of the route, the transit fees if the tanker uses a canal or a strait within the territory of an independent state, and the political safety of certain waterways. The most advantageous combination of these costs has to be added to the expense of building, maintaining, protecting and paying transit fees through a pipeline before the ultimate cost of transportation can be calculated.
THE IRAQI SYSTEM
Ironically, in the mid-1990s, it is the pipeline system of Iraq, a country isolated from the world community and subjected to U.N. sanctions in the wake of the 1990-91 Gulf War, that is most extensive, complex and exposed to uncertainties. Initially, oil was found in commercial quantities in the northern regions of Iraq (mostly Kirkuk) in 1925; its exports began in the 1930s, when Iraq, as a League of Nations mandate entrusted to Great Britain, was not yet a fully sovereign country. Its oil fields were connected with a few terminals abutting the eastern Mediterranean shore through a pipeline system that first brought oil to Haditha in west-central Iraq and then divided into two branches: a 12-inch pipeline to Haifa in British-controlled Palestine (since 1931) and a 12-inch pipe to Tripoli in French-mandated Lebanon (since 1934), with a sideline forking from Homs to Banias in French-mandated Syria (since 1950). These were later supplemented by a 16-inch line to Haifa in 1946 and a 30-inch line to Tripoli and Banias. Thus, these pipelines had to traverse the territories of Syria, Jordan, Palestine and Lebanon to reach their respective maritime terminals. Fortunately for the Iraq Petroleum Company (I.P.C.)-an international consortium involving British, French, Dutch and, later, American interests-transit fees for the use of these pipelines were non-existent because the relevant agreements authorizing their construction were concluded by the British and French mandatory authorities, which chose by mutual courtesy not to consider the pipelines as profit-generating ventures.
Before long, however, this situation underwent substantial changes. With the emergence of Iraq, Syria, Jordan and Lebanon as independent states in the 1930s and 1940s, their new sovereign governments demanded compensation for permitting the transit of oil through their territories. Moreover, the establishment of Israel and the resulting Arab boycott caused the shutdown of the Haifa branch of the I.P.C. pipelines in 1948.
As the years passed, additional complications arose. After the overthrow of the Iraqi monarchy in 1958, the successive revolutionary dictatorships became less and less accommodating to Western oil interests and, first partly and then totally, nationalized their oil fields and installations. Similarly, ownership of the I.P.C. pipeline network was parceled out to the countries that the pipelines traversed. On the other hand, a number of armed conflicts between Israel and the Arab states resulted in sabotage, i.e., puncturing and damaging of the sectors of the pipeline traversing Syria. Even though the damage was rather quickly repaired or so-called "looping" was resorted to in order to bypass the damaged sections, the reliability of this west-oriented pipeline system suffered considerably. The civil war in Lebanon, which began in 1975, brought about further deterioration in the pipeline's security. As a result, the Banias branch was closed in 1976, to be only partially reopened in 1979. Furthermore, beginning in 1963, when socialist governments came almost simultaneously to power in Iraq and Syria, relations between the two branches of the ruling Baath party, in Baghdad and Damascus, gradually deteriorated to a point of a deep-seated and lasting feud. This feud led Syria to close its sector of the original I.P.C. pipeline to prevent exports of Iraqi oil. The impetus for this decision came from the war between Iraq and Iran in the 1980s, inasmuch as Syria, although like Iraq an Arab country, favored the Iranian side and, to inflict damage on Iraq, closed the Kirkuk to the Tripoli/Banias line in 1982. Thus, the three traditional outlets to the eastern Mediterranean, apart from the earlier-closed Haifa branch, had to be abandoned. (A sector of the Haifa branch, skirting Syrian territory, continued to be used for supplies of water to Jordan and for oil for Jordan's Zerka refinery.)
Anticipating troubles in its relations with Syria, Iraq decided to take two protective or preventive measures: on the one hand, in the mid-1970s, it decided to build a 589- mile-long, 40-inch pipeline to the Mediterranean via the territory of Turkey. Even though this line was regarded with displeasure by some sectors of broad Arab public opinion as favoring Turkey over a sister Arab country, it went into operation in 1977, linking Iraq's northern oil fields with the Turkish terminal in Dortyol in the region (sanjak) of Iskenderun. Its capacity was 700,000 barrels a day (b/d). It was advantageous to both parties because it provided an additional safeguard to Iraqi oil exports while Turkey benefited from transit fees. Ownership of this line was shared by the Iraqi National Oil Company and the Turkish government, depending on whose territory the line was passing through. Because by 1982 the earlier line traversing Syria became closed, the Turkish branch gained in importance and in 1987 a second was constructed, a 46-inch line through Turkey (paralleling the first), increasing the total throughput capacity to 1.6 million b/d. Although much safer than the Syrian line, it was not completely immune from damage: some of its pumping stations on Iraqi territory were destroyed during the Gulf War of 1990-91. Moreover, due to the imposition of the U.N. sanctions on Iraq as an aggressor, the Turkish line was closed and, as of this writing, is not operating.
Another safeguard that Iraq took in anticipation of hostilities with the neighboring countries was to construct in 1975 a 42-inch "strategic pipeline" with a throughput capacity of 700,000 b/d linking Kirkuk to the Persian Gulf terminal at Fao. By that time Iraq had expanded its producing capacity into the oil-rich southern area at Rumaila. Production of crude from Rumaila was, under normal-that is, peaceful-circumstances, expected to be exported by the nearby terminal on the Gulf at Fao. But in case Fao became inoperative as a result of war or a major accident, the Rumaila oil could supplement (or substitute for) the Kirkuk oil by being directed via Haditha northward to the Turkish pipeline or, should the Syrian route become available, to transit Syria. The "strategic line" was thus constructed with a reversible flow, i.e., to serve the movement of oil both north and south. A second "strategic" line, 42-48 inches in diameter, was begun in 1990, but its construction was a casualty of the Gulf War.
The Fao terminal was supplemented in the south by the Mina al-Bakr and Khor al-Amaya terminals, the latter situated offshore. Because of their proximity to Iran, all these terminals were severely damaged during the Iraq-Iran War. After the cessation of hostilities, they were rebuilt but suffered new damage during the Gulf War. Construction of the Turkish and "strategic" lines did not exhaust Iraq's search for a safer alternative and a larger throughput capacity for its increasing production. For this reason, during the war with Iran and its immediate aftermath, Iraq constructed two additional pipelines which, skirting the territory of Kuwait, led to Saudi Arabia. [The] first, completed in 1985, was a 48-54-inch I.P.S.A. 1: 700 miles long, with a 500,000 b/d capacity. It met the newly constructed Saudi "Petroline" abutting Yanbu on the Red Sea. The second, built in January 1990, parallel to "Petroline," was a 56-inch I.P.S.A. 2: 1,575 miles long, able to carry 1.65 million b/d but restricted by the Saudis to 500,000 b/d. Both were owned entirely by Iraq but were shut down by Saudi decision in August 1990, when Iraq attacked Kuwait.
If restrictions on the use of pipelines radiating from the Iraqi oil fields were to be removed, Iraq would possess a substantial capacity to export large volumes of oil. Moreover, a short internal pipeline linking Rumaila to the Fao outlet would further add to its export capacity. In addition, the recently signed peace treaty between Jordan and Israel might result in the reactivation of the Haifa route, provided of course that Iraq would renounce its state of war with Israel.
However, reopening these pipelines would require considerable time for technical reasons. When a pipeline is not used for an extended period, it deteriorates because of the accumulation of harmful sediments. To restore it, a process of flushing is needed as well as repairs or renovation of pumping stations. In addition, new agreements pertaining to transit fees are likely to require time-consuming negotiations. Finally, if Iraq desired to continue its membership in the Organization of Petroleum Exporting Countries (OPEC), it would have to adhere to its collective decisions regarding production quotas, unless it decided to become a "rogue state," slashing its prices to regain the lost markets.
Even under the U.N. sanctions, Iraq is permitted to export limited amounts of oil to Jordan. Moreover, it is authorized to export $1.6 billion worth of oil for humanitarian reasons, to earn enough foreign currency for the purchase of necessary medicines and foodstuffs. As of fall 1994, Iraq chose not to avail itself of this second opportunity, demanding an end to the U.N.-imposed restrictions. However, lifting of the sanctions is contingent on Iraq's full compliance with U.N. resolutions which, among other things, require Iraq to dismantle its nuclear and chemical warfare facilities and give unimpeded access to international inspection teams. Iraq has claimed that it has fulfilled these conditions (and found some backers for its position in Western Europe and Russia) but has encountered opposition from the United States and Britain, whose votes prevented the U.N. Security Council from satisfying Iraq's demands.
THE SAUDI PIPELINE SYSTEM
Saudi Arabia's oil fields, including the largest in the world at Ghawar, are located in its Eastern Province close to the coast and offshore in the Gulf, Safaniya being the most abundant. Oil was discovered in that region in 1938, but major exploitation began only after the end of World War II. During that war the Allies deliberately avoided investing effort in the development of the Saudi fields, giving priority instead to the Iranian production, already well-advanced and not requiring costly pioneering.
Because of the location of the Saudi fields close to the shore, the firm holding the concession, the Arabian-American Oil Company (Aramco) had a choice of exporting crude by tankers through the Gulf or constructing a pipeline across the Arabian deserts to the Mediterranean. The first alternative involved a lengthy voyage through the Persian Gulf, the Gulf of Oman, the Arabian Sea (part of the Indian Ocean), the Red Sea, the Mediterranean and the Atlantic, if the destination was the Western Hemisphere. It could work smoothly assuming that the Strait of Bab el-Mandeb at the southern end of the Red Sea and the Suez Canal, an internationally-operated waterway in Egypt's territorial waters, were open and politically safe. If, for any reason, these narrow waterways were to be closed or rendered impassable by acts of war, the tankers would be compelled to sail around the southern tip of Africa to reach their Western destinations, thus making the voyage still longer and more costly.
Weighing all these factors, Aramco chose to construct in 1951 a Trans-Arabian Pipeline (Tapline) through the Saudi territory along the border with Iraq, then through Jordanian and Syrian lands, to abut the Lebanese coast south of Beirut, in Zahrani next to Sidon. It was a 30-31-inch line 747 miles long, with a number of pumping stations mostly in Saudi territory, originating in Qaisumah.
Although much shorter and initially more economical than the earlier-mentioned tanker route, it was more vulnerable to financial and political uncertainties. Each of the transit countries (even including Saudi Arabia, where the longest stretch of the line was located) insisted on hefty transit fees, and Tapline's management in Beirut was constantly involved in negotiations with the governments of the transit countries to determine a proper payment formula. Ideally, the length of the line in a given territory should perhaps be the decisive factor. But a country with a short segment traversing its territory (such as Syria or Lebanon) would be inclined to charge a higher fee, independent of the line's length, just for giving permission to allow the transit. Moreover, in the case of Lebanon, its government insisted on an extra payment for allowing the use of Zahrani as a terminal. If actual or potential demands of unionized labor are added, the costs of running the Tapline escalate to the point of compelling Aramco's owners to explore the possibility of switching back to tanker transportation from the Ras Tanura terminal on the Saudi coast to the Gulf.
The civil war in Lebanon caused Tapline to close its operations in 1975. Although it was partly reopened in 1979, it did not prove sufficiently economical in comparison with cheaper tanker rates, and it was finally closed in 1983. By that time Aramco had become the property of Saudi Arabia and renamed Saudi Aramco with the lengthy stretch of the pipeline also reverting to the government, while the Lebanese government acquired the segment of the line in Lebanese territory. Limited amounts of oil are still conveyed by Tapline as far as Amman, Jordan. Tapline had experienced another complication in the 1960s, when Israel occupied the southern part of the Syrian territory through which the line transited. At that time special negotiations were conducted with Israel to allow an unimpeded transit. Thus, by 1983, the great saga of Tapline involving four governments, numerous politicians, oil men and military leaders had come to an end.
From the Saudi point of view, however, exclusive reliance on tankers sailing from the Gulf appeared fraught with danger, especially as the Iraq-Iran War of the 1980s made passage through the Gulf waters hazardous. In anticipation of uncertainties in Gulf shipping, Saudi Arabia constructed the previously mentioned 48-inch "Petroline," 747 miles long, linking Abqaiq in the Eastern Province with Yanbu on the Red Sea north of the diplomatic capital, Jeddah. During the first four years, Petroline was operated by Mobil Overseas Pipeline Company. In 1987, a second parallel line, 28- inches in diameter, was added to it, ensuring a total throughput capacity of 4.8 million b/d. As mentioned above, Petroline became connected with the Iraqi pipeline system, but this linkage was short-lived owing to the outbreak of war between Iraq and Kuwait.
The two military conflicts that disturbed the peace in the Gulf, the Iraq-Iran War of the 1980s and the Gulf War of 1990-91, caused Saudi Arabia to explore further alternatives to the existing modes of transportation. One was to build an additional terminal on the, narrow Saudi coast of the Gulf between Qatar and the United Arab Emirates (UAE). This terminal would be reached by a pipeline following the length of this Saudi "finger." Another was to link the Shaibah field on the border of Saudi Arabia and the UAE with an outlet on the Gulf of Oman through a pipeline that would bypass the Strait of Hormuz, a scene of Iranian-Arab conflicts.
Despite its access to both the Gulf and the Red Sea, Saudi Arabia has not achieved perfect security for its oil exports. Conflicts in the countries traversed by Tapline, the repeated blocking of the Suez Canal as a result of Egyptian-Israeli hostilities (in 1956 and 1973), and attacks on neutral shipping in the Persian Gulf by Iran in the 1980s have invariably interfered with or threatened Saudi oil exports. This explains the unceasing search for alternative export routes in Saudi Arabia.
POTENTIAL PROBLEMS
In 1993, the Chevron Company of San Francisco concluded a joint-venture agreement with the government of Kazakhstan known as Tengiz-Chevroil. Actual negotiations leading to this agreement had begun somewhat earlier, when the USSR was still in existence. The very abundant Tengiz oil field is situated in the area adjoining the northeastern shore of the Caspian Sea. Of all major oil fields in the Middle East Central Asian region, the Tengiz field is probably most distant from a maritime outlet with international connections (the Caspian Sea being in reality a big inland lake). Once bigger volumes of oil are produced (it may take some ten years to reach that point), the question of the most practical route of exports will inevitably arise. In fact, attention to it is already being paid by Chevron and the Kazakhstan government. Various scenarios are being contemplated. One alternative is to construct a pipeline leading through the Turkmen Republic and Iran to the Persian Gulf. The drawback of this route would be the need to traverse the territories of two states, one of which, Iran, is not disposed to be friendly to a Western capitalist enterprise. Moreover, as the recent history indicates, the Gulf does not ensure iron-clad security to shipping.
A variety of other solutions is being debated. Many oil executives are inclined to espouse the idea of a pipeline traversing Russian territory around the Caspian and abutting at the Black Sea coast as most realistic. The Russian port of Novorossiysk north of the Caucasus is mentioned as a possible terminal. From there the route is open to speculation. Tankers loading there would have to transit the Turkish-controlled straits of the Bosphorus and the Dardanelles to enter the Mediterranean. Turkey does not appear enthusiastic about such a route, fearing possible accidents, spills and blockage of the straits. Another alternative is to direct the pipeline from Tengiz via Russia through Komsomolsk north of the Caucasus to Georgia and from there through the Turkish territory by pipeline to a Mediterranean terminal. Any of the proposed solutions is bound to create problems connected with transit fees, protection (especially in tribal areas) and security.
To complete this review, it may be in order to mention another potential issue, that of the gas line linking Ahwaz in Iran with Astara. Six hundred and eighty-seven miles long and 42 inches in diameter, it began in 1973 conveying natural gas to the Soviet border to be linked to the Soviet pipeline system ensuring distribution in various areas of the Soviet state. With the collapse of the Soviet empire and the emergence of successor republics, independent Azerbaijan became both a recipient and a transit area of Iranian gas. This has naturally created a new situation politically and economically for Azerbaijan and Russia. Thus far, however, no crisis in the operation of this gas line has been reported.
Middle Eastern states and foreign consumers of their oil have a vital interest in the maintenance of economical and safe pipeline systems. These systems are, however, vulnerable to political changes in this rather turbulent region and require much advance planning and an increasing search for alternatives in case the existing pipelines are rendered inoperative by politically motivated decisions or acts of war.