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TAPLINE:
ITS REASON FOR BEING
Tapline was constructed and has been operated
for one purpose: to facilitate and minimize the cost of moving part of
Saudi Arabia's crude oil production to the markets of the Western
world. If it is to justify its existence, this purpose must be
achieved at all times.
Crude oil can be moved over great distances by
two principal methods. One is by pipeline, the other by tanker. These
two methods, while complementary in some instances, are in direct
competition with each other. Where a choice exists, whichever can
transport oil at the lower cost receives the business.
Oil moving by tankship from the producing
fields of Saudi Arabia to the Mediterranean must move a distance of
3,500 kilometers, compared with 1,700 kilometers if Tapline is
used. When Tapline was built, this difference in distance materially
helped the pipeline's competitive position. For instance, when
construction of Tapline began in 1947 it took approximately three
16,000-ton tankers to carry the equivalent of one day's Tapline
capacity.
In the 14 years since 1947, the picture has
changed, and Tapline's competitive position is sharply affected by
modern tankers. Today a 100,000-ton tanker can carry almost twice
Tapline's daily capacity.
When Tapline began operations, tankers
averaged 13,000 deadweight tons in size and carried an average cargo
of about 96,000 barrels. Today, supertankers exceeding 100,000
deadweight tons are in use, and the average tanker size and cargo have
increased to about 20,000 deadweight tons and 140,000 barrels,
respectively.
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Moreover, tanker operating costs are substantially lower than they
were when the pipeline was conceived and built. And as more and even
larger tankers are built these operating costs are likely to become
even lower.
As an illustration of the relationship of
tanker size to tanker transportation cost, oil can be shipped from the
Persian Gulf Port of Ras Tanura, Saudi Arabia, to EuropeRotterdam,
Netherlands, for examplein three different ways, for substantially the
same per-barrel cost:
- By 85,000 deadweight-ton tanker making the trip to Ras Tanura
and back to Europe via the Cape of Good Hope, South Africa.
- By 65,000 deadweight-ton tanker traveling in ballast from
Europe to Ras Tanura via the Suez Canal and then returning to
Rotterdam via the Cape of Good Hope.
- By 42,000 deadweight-ton tanker making the trip each way via
the Suez Canal.
However, a 100,000 deadweight-ton tanker
travelling via the Cape can transport oil between Ras Tanura and
Rotterdam for even less than the cost of any of these methods.
The meaning of this to Tapline is obvious.
To continue getting its share of the business,
Tapline must meet this increasingly keen competition from tankers. Its
costs for moving a given quantity of oil from Saudi Arabia to the
Mediterranean must at all times be competitive with tanker
charges.
Tapline can accomplish this only by keeping
its costs down through maximum efficiency of operation, improved
techniques and use of the finest skills and equipment.
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