Business
Iran Is Preparing Oil Tolls. These Companies Can Build Workarounds. — Barrons.com
Iran Is Preparing Oil Tolls. These Companies Can Build Workarounds. — Barrons.com
About this update from Saipem S.p.a.
By Avi SalzmanIran appears increasingly intent on charging fees to companies that ship energy products through the Strait of Hormuz, the main export route for oil from the Persian Gulf.That's bad news for Iran's neighbors like Saudi Arabia and the United Arab Emirates. But it could benefit several companies that build infrastructure to reroute oil and gas away from the Persian Gulf.Among the public companies that construct pipelines and other installations in the Middle East are Italian engineering firm Saipem and France-based Technip Energies. SLB, the world's largest energy services firm, also works with Middle Eastern countries to manage and expand their pipeline networks.The U.S. and Iran are in the midst of a 60-day pause in fighting to hash out a longer term peace deal. During those 60 days, no fees will be charged to ships looking to pass through the strait. But Iran is already laying the groundwork for a new way of doing business once the pause is over.The foreign ministry of Oman — which is on the opposite side of the strait from Iran — said in a joint statement with Iran on Tuesday that they discussed "the future administration of navigation in the Strait of Hormuz and the services that will be provided in this regard and the costs associated with them in accordance with international standards." Mohammad Bagher Ghalibaf, Iran's chief negotiator, has also said that Iran will administer the strait after the war ends, according to Iranian state media. "The Strait of Hormuz will never return to its prewar conditions and will be administered by the Islamic Republic of Iran, in accordance with international law," Ghalibaf said.Gulf countries have already said that Iranian control of the strait is unacceptable. If Iran does start charging tolls, countries will double down on efforts to export their oil and gas without relying on the Persian Gulf. Saudi Arabia and the UAE already have alternate export routes. Saudi Arabia built a pipeline to the Red Sea in the 1980s that can transport up to seven million barrels a day of oil. It has been relying heavily on that pipeline during the war. The UAE has a pipeline that can transport about 1.8 million barrels of oil a day to a port called Fujairah that sits just outside the strait, and is already working to double its capacity.Other countries are also expected to expand their alternate export routes. Iraq, fo...