Amid Iran Threats of Blockade, Gulf States Open Pipeline Bypassing Strait of Hormuz

Watch: Iran repeatedly warned that it would blockade the strait, through which some 20 percent of global oil exports are estimated to pass through, in retaliation to aggression.

Officials in the United Arab Emirates say a key overland pipeline bypassing the Strait of Hormuz has begun operating, giving the OPEC member insurance against Iranian threats to block the strategic waterway.

The director general of Fujairah municipality at the Indian Ocean terminus of the pipeline, Mohammed Saif al-Afkham, says officials inaugurated the project there Sunday. The pipeline begins in the UAE's west.

The state-run International Petroleum Investment Company behind the project confirmed that the first export shipment was loaded onto a tanker through the pipeline.

The pipeline can handle at least 1.5 million barrels of crude a day.

Some 20 percent of global oil exports are estimated to pass through the strait, and Iran has warned that it could retaliate against external aggression by making the waterway impassable.

Iran's armed forces have several times warned that Tehran might consider close the Strait of Hormuz at the mouth of the Gulf if its interests were jeopardized, but the Iranian foreign ministry has so far played down the warnings and said that Tehran would not endanger global oil exports.

A similar warning came last week from the Teheran parliament, with a bill being drafted to authorize closure of the strait in response to EU embargoes on the country's oil exports. The bill has not yet been presented to the legislative body.

Emirati officials quietly began filling the new pipeline with oil on June 30, according to the U.A.E. embassy in Washington. A statement from the embassy said the project underscores the U.S. ally's "commitment to ensuring the reliable and safe delivery of crude oil ... to global markets."

Officials including the Emirates' energy minister gathered in Fujairah for the formal inauguration of the pipeline, said Mohammed Saif al-Afkham, the director general of Fujairah municipality.

The International Petroleum Investment Co., the state-run company behind the project, confirmed that the pipeline became operational with the first commercial shipment being loaded onto a tanker for export.

The U.S. ambassador to the U.A.E. attended the inauguration, underscoring the project's strategic significance. Ambassador Michael H. Corbin called the launch "a historic step in establishing multiple routes for the vital flow of oil from the Arabian Peninsula."

Although several Gulf Arab oil and gas producers fear a shutdown of the strait could block exports, only the U.A.E. and Oman have coastlines on the Indian Ocean side of the strait. Saudi Arabia also can avoid Hormuz by shipping its Gulf fields' oil output through ports on the Red Sea, but it would have to significantly improve its transport infrastructure to get its full production out.

oil tankers - AP - 22032012