Aramco’s Nasser says Hormuz bypass pipeline work has begun

Saudi Aramco has begun work to expand its East-West crude pipeline, which carries oil around the Strait of Hormuz, CEO Amin Nasser said on Tuesday, November 3. He also said the company plans to pump as much oil as it can this quarter. "With regard to the expansion to our East-West pipeline and the additional networks that we are building, this work has already started," Nasser told analysts on a call after the company's third-quarter results, Reuters reported via MarineLink. The effective blockade of Hormuz, which used to carry about 20% of the world's oil, has changed how Gulf producers move crude and where they invest.marinelink.com

Output Push and New Routes

Nasser said Aramco will maximize production in the fourth quarter after exports returned to near prewar levels in October. "We expect, as we continue with exports utilizing all the routes that we have, to maximize our production going forward in the fourth quarter," he said, according to Bloomberg. He added that the company is "ready to rapidly ramp up production when the situation calls for it".news.bloomberglaw.com+1

Aramco can currently export through Hormuz, the Bab el-Mandeb Strait and the Suez Canal. It is also doing engineering work on other routes, but Nasser said no details will be released until final investment decisions are made. "We continue to explore additional overseas storage capacity and alternative export routes to further strengthen our global supply network," he said in the company's results statement. Preliminary engineering for the pipeline expansion is already underway, Argaam reported.argaam.com+2

A Lifeline Under Fire

The pipeline can carry up to 7 million barrels a day and has been attacked several times during the US-Iran war. A drone strike in September took the roughly 750-mile line to Yanbu offline for less than a week. Saudi Arabia has since said it plans to raise pipeline export capacity to as much as 10 million barrels a day within two to three years, The New York Times ↘ 2.50% reported. Supply reliability slipped to 97.8% in the quarter, Reuters reported.reuters.com+2

Nasser said more than 130 attacks on tankers have been reported during the conflict, and freight rates have risen more than 15-fold from a year ago.marinelink.com

Profits Rise Despite Disruption

Higher prices made up for lower volumes. Aramco's third-quarter net profit rose 34.5% to $36.25 billion, helped by its exit from a joint venture. Adjusted net income came in at about $31.2 billion, beating analyst consensus. Adjusted downstream earnings rose 234% on stronger refining margins.english.aawsat.com+1

Nasser warned that the effects reach well beyond oil. "Higher transportation costs, fertiliser shortages, and impacts on food and consumer goods are feeding into inflationary pressures across the global economy," he said.marinelink.com