ALTERNATIVE TO KHARK: IMPLICATIONS OF NEW IRANIAN FACILITIES TO EXPORT OIL

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP88T00096R000100140003-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 17
• Document Creation Date: December 27, 2016
• Document Release Date: August 11, 2011
• Sequence Number: 3
• Publication Date: March 1, 1986
• Content Type: REPORT

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Directorate of ~~~"~~
Alternatives to Khark:
Implications of New Iranian
Facilities To Export Oil
NESA 86-10015
March 1986
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Directorate of ~ Secret
Intelligence
Alternatives to Khark:
Implications of New Iranian
Facilities To Export Oil
Global Issues and
NESA.
contributions from
This paper was prepared by (Office of
Near Eastern and South Asian Analysis, with
Comments and queries are welcome and may be
directed to the Chief, Persian Gulf Division, NESA,
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Secret
NESA 86-1001 S
March l 986
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 Alternatives to Khark:
Implications of New Iranian
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Secret
Facilities To Export Oil
Key Judgments Tehran is developing new oil export facilities to enable it to maintain
/ry/ormation available earnings, keep its economy afloat, and continue the war against Iraq,
as oj4 March 1986 whether or not the Iraqis put the Iranian export terminals at Jazireh-ye
was used in this rePOrt.
Khark (Khark Island) out of operation. Projects that are nearly complete or
are contracted for, together with repairs under way at Khark, will give Iran
a potential export capacity for onshore oil of 6 million barrels per day (b/d)
by this spring and 7 million b/d in late 1986, well over its export level in re-
cent years of 1.5-1.8 million b/d. The new facilities, by providing
substantial redundant loading capacity, will make this export level more
secure. They will also give Tehran the option of using some of its 1 million
b/d of surplus production capacity to boost oil shipments in an effort to
maintain revenues in the face of falling oil prices.
The new facilities are within range of Iraqi aircraft, and we expect
Baghdad to attack them and tankers loading at them. Nonetheless, the
redundant capacity they will provide and the ease with which some of the
new facilities can be repaired will make it even more difficult for Iraq to
squeeze Iran financially. Unless the Iraqis adopt significantly more
aggressive tactics than they have used so far, the new facilities will help
Tehran to avoid-despite the oil price war-austerity measures that could
spark domestic unrest and undermine the Iranian war effort.
As a result, Iran's new oil export options will dim already faint hopes for a
softening in Iranian terms for peace or significant political change in
Tehran while Khomeini lives. At the same time, they will reduce the
danger that [ran, out of desperation, would dramatically escalate the war
in the Persian Gulf by attacking Gulf Arab oil facilities or attempting to
close the Strait of Hormuz.
Iraq will have to consider new tactics to force Iran to the negotiating table,
and it may expand the air war to other economic targets and possibly to
Iranian cities. [n any event, more Iraqis will conclude that President
Saddam Husayn is unable to end the war.
iii Secret
NESA 86-100/5
March 1986
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Secret
Alternatives to Khark:
Implications of New Iranian
Facilities To Export Oil
The Iraqi air campaign against Iran's oil export
facilities at Jazireh-ye Khark (Khark Island) has had
only temporary effects on the level of Iranian exports.
It has, however, raised the risk of a prolonged cutoff
of exports from Khark and consequently of major
Iranian retaliation that could affect the interests of
the Arab Gulf states, the United States, and US allies
that depend on Persian Gulf oil.' The initial attack on
15 August 1985 and a raid on 19 September inflicted
substantial damage on the loading terminals. Exports
from Khark were interrupted for several days after
the latter attack and again briefly after raids on 14
and 15 November. Iraqi attacks in early 1986-
including raids beginning on 23 January at Ganaveh,
the location of the final control manifold for oil going
to Khark-caused further interruptions.)
and oil installations near the border. The Iranian
ground offensive that began along the Shatt al Arab
The closest thing to atit-for-tat Iranian response has
been a few ineffective air raids against Iraqi military
on 9 February and led to the capture of Al Faw may
also have been intended partly as punishment for the
Iraqi airstrikes against Iranian oil facilities. We be-
lieve, however, that Tehran would have undertaken
such an operation anyway as part of its strategy of
using its numerical superiority in ground forces to
inflict defeats on Iraq and weaken Saddam Husayn's
political position.
Iranian leaders have frequently threatened to make
the Gulf states pay for their support to Baghdad.
Tehran also has vowed to prevent anyone from export-
ing oil from the Gulf if Iran cannot export its own oil.
Iran has not yet struck oil facilities in the Gulf states,
although it has fired missiles at empty tankers bound
for Gulf Arab ports. We believe Iran's military
response in the Gulf has been limited for several
reasons: the Iranians have been able to repair enough
of the damage at Khark to avoid prolonged loss of
income; Iran has few military resources to retaliate
with airstrikes or blockades; and Tehran would risk
uncontrolled escalation or Western intervention if it
attempted a major attack on Gulf Arab oil exports.
An additional consideration, however, is that Tehran
is accelerating the development of alternative export
routes for its oil to keep revenues flowing and its war
effort going even if Khark is knocked out.
Alternative Iranian Facilities
The National Iranian Oil Company (NIOC) has
considered several projects for new oil export facili-
ties, including one that is virtually complete, another
for which contracts have been awarded, and others
that we believe Iran will postpone. The nearly com-
pleted facility will link the existing pipeline manifold
at Ganaveh to a new loading facility about 25 kilome-
ters offshore, between GanayPh and Kharlr Twn a7
inch pipelines have been laid
to terminate in water at east meters
deep. This facility will enable tankers to load oil from
floating hoses and single-point mooring (SPM) buoys
and will have an estimated capacity of about 2 million
barrels per day (b/d).
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We estimate that, if repairs under way at Khark
Island and Ganaveh are completed, nearly 4 million
b/d of capacity will be restored there. The new SPMs
thus will give Iran a potential export capacity in the 25X1
northern Gulf that is three or four times the 1.5-1.8
million b/d of oil it exported during most of 1984 and
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Description Status Estimated Capacity Estimated Cost
(million b/dJ (billion US $J
Two 42-inch pipelines from exist- Nearly complete 2
ing pipeline manifold at Ganaveh
to single-point mooring buoys
about 25 kilometers offshore.
Conversion of partly completed 56- Contracts awarded; con- 1
inch IGAT2 gas pipeline to carry struction with standard
oil southeast to a new terminal on techniques will require
the coast, probably at Taheri. Con- eight to 10 months
struction of link pipelines to Gach-
saran and other major inland air-
fields, a 40-kilometer pipeline from
Kangan gas processing plant to
Taheri, and a pumping station.
Pipeline from Kangan or Taheri to
a terminal east of Strait of Hor-
muz, probably at Jask.
NIOC and Majles have 1-2
considered but so far re-
jected because of high
cost and required lead-
time of at least two years
Pipeline based on existing plans For Tehran considering, but 1
Pars gas pipeline, which originally probably will not adopt
was designed to bring gas from revised plan
Pars field to inject into onshore
oilfields. Redesigned pipeline
would bring crude oil south.
Iraqi airstrikes at
Ganaveh may be de-
laying operation.
IGAT2's original
purpose-export of
gas to USSR-
would be abandoned,
but dispute over
price makes such
sales unlikely
anyway.
Iranians may recon-
sider after war as
long-term project to
make oil exports
more secure.
Undetermined Gas injection needed
soon to correct for
low reservoir pres-
sures in main Iranian
oilfields.
1985. The additional capacity will give Tehran a
greater chance to maintain exports in the face of
damage from Iraqi attacks than it would with Khark
Island alone.
contracts
have been let for an additional project, which involves
laying pipe approximately 80 kilometers from the
major inland Gachsaran oilfield eastward across the
mountains to connect with the partly completed 56-
inch IGAT2 gas pipeline. This line originally was
designed to take gas from Iran's southern gasfields to
the USSR. Additional adjustments in existing pipe-
lines will have to be made for oil from Iran's other
major oilfields to reach this line, and a pumping
station will have to be added for the line to handle oil
rather than gas. The IGAT2 gas project may have to
be abandoned, but this would be only a nominal
sacrifice because Moscow currently has little interest
in gas at prices Tehran is likely to offer.
The existing IGAT2 line ends. at the Kangan gas
processing plant, requiring NIOC to lay a linking
pipeline from there to an oil-loading terminal on the
coast, probably at Taheri, which is 40 kilometers from
Kangan such a
terminal will add approximately 1 million b/d of oil
export capacity and will cost $1-1.5 billion. The
estimated completion time of eight to 10 months could
be cut by up to half, at higher cost, by using
additional construction crews and an intensified work
schedule and by paying premium prices for parts and
equipment. In addition to giving Iran even more
export capacity, perhaps by the end of 1986, this
project will reduce Tehran's reliance on the pipeline
complex at Ganaveh, through which oil flows to
Khark and will flow to the new SPMs.
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 Iranian Oil Export Alternatives
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