Iran is building an onshore oil pipeline worth US$1.8 billion to a terminal just outside the Strait of Hormuz, the most critical oil chokepoint in the world, Iran’s Oil Minister Bijan Zangeneh said.

As much as US$700 million of the investment will go to develop the port terminal at Jask, which sits just east of the Strait of Hormuz, the most important oil shipping corridor in the world, which Iran has threatened to close since the U.S. pulled out of the nuclear deal and re-imposed sanctions on Iran’s oil exports.

The project will transform the region, as various oil storage facilities, export jetties, wave breakers, and single buoy mooring systems would be built in Jask, Iran’s oil ministry’s news service Shana reported.

Apart from the port development, the region of Jask will also host two refineries and petrochemical facilities, according to Zangeneh’s plan.

The first commodity to be exported from the Jask terminal would be gas condensate from the South Pars field in the next Iranian calendar year, the oil minister said. The current Iranian calendar year started on March 21, 2019.

Last month, Iran said that it was aiming to complete by March 2021 the long crude oil pipeline from its northwest deep in the Persian Gulf to a southern terminal east of the Strait of Hormuz, in order to export oil by shipping it first onshore to the terminal to bypass the world’s most critical oil chokepoint.

According to Touraj Dehghani, Deputy CEO and Member of the Board at Iranian company Petroleum Engineering and Development Company (PEDEC), Iran will be able to bypass the Strait of Hormuz once the Goureh-Jask Crude Oil Pipeline project becomes operational.

The pipeline, which will cost US$2 billion, will be 1,100 kilometers (684 miles) long and capable of carrying 1 million bpd of crude oil from the Goureh oil terminal in the northwest to the Jask region on the Sea of Oman, without the need to have tankers travel through the Strait of Hormuz.

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com: