News / Economy

    Dubai Flights Rely on UAE-Refined Iranian Oil

    Logo of Emirates airline on the wing of one of its airplanes after takeoff from Dubai airport, United Arab Emirates, April 16, 2013.
    Logo of Emirates airline on the wing of one of its airplanes after takeoff from Dubai airport, United Arab Emirates, April 16, 2013.
    Reuters
    Fuel made from Iranian oil is legally powering thousands of flights a year out of Dubai's booming airport, despite U.S. pressure on buyers to shun Tehran's petroleum exports.
     
    It may even fuel U.S. allied military jets in the Middle East.
     
    Washington and the European Union have slashed Iran's exports in half over the last year by leaning on importing countries to find alternative feedstock for their refineries.
     
    Meanwhile, close U.S. ally Dubai, long a major user of Iranian light oil known as condensate, continues to process tens of thousands of barrels a day at an Emirates National Oil Company (ENOC) refinery, according to oil industry sources and shipping data.

    ENOC then pumps the resulting fuel to Dubai airport, the world's second busiest.
     
    ENOC's chief executive declined to comment this week on how much Iranian oil the company was still importing and ENOC media relations did not respond to repeated requests for comment.
     
    U.S. and European companies are not allowed to buy any Iranian refined oil products, under tough sanctions imposed by Washington to force Tehran to stop its nuclear activities.
     
    But any airline is free to use fuel made from Iranian oil in other countries, because once it passes through a refinery outside Iran it is no longer considered of Iranian origin under sanctions.
     
    "In our view jet fuel from an Emirati refinery is Emirati jet fuel, it is not Iranian no matter what it was made from," a U.S. government official in Washington said.
     
    ENOC says it is the largest provider of jet fuel at Dubai International Airport (DXB) and that its portfolio boasts a growing number of military customers.
     
    One such customer is the U.S. Defense Logistics Agency (DLA) which supplies planes at the Al Minhad airbase near Dubai, a hub for U.S.-allied forces in the Middle East.
     
    "DLA Energy does contract with ENOC International Sales, LLC, to supply jet fuel to Al Minhad Air Base," a spokesman for the U.S. Department of Defense said. "The contract was let in August 2011. This contract expires in August 2013."
     
    It is not clear whether or not some of the fuel ENOC supplies under contract to the DLA come from ENOC's Jebel Ali refinery near Dubai. A western government source said ENOC also buys some fuel produced in refineries in Bahrain and Kuwait.
     
    ENOC did not comment on whether some or all the fuel it supplies to the DLA is produced at Jebel Ali.
     
    But ENOC's website says most of the jet fuel it supplies to the airport is pumped through a 60,000 barrel per day (bpd) pipeline from the refinery, and demand at the world's fastest growing airport is rising so much that it is laying a second pipeline.
     
    Executive order

    Iran exported about $7.5 billion worth of condensate from its main export facility at South Pars in the year ended March 20, 2013, according to Iranian media reports.
     
    ENOC was the biggest buyer of Iranian condensate in 2012, when its imports rose to an average of 127,000 bpd, according to analysts' estimates.
     
    An executive order issued on July 31, 2012, gives U.S. President Barack Obama the option to impose sanctions on buyers of Iranian condensate, but only if the U.S. believes there is sufficient alternative supply to permit a significant reduction in volumes from Iran.
     
    ENOC announced in February it had secured about 20,000 bpd of condensate from Qatar to feed its 120,000 bpd refinery and said it was working to find more alternatives.
     
    The company has not announced further substitution deals, suggesting it has not yet found long-term alternative supplies.
     
    Ship tracking data on Reuters shows a vessel able to carry around a million barrels of oil shuttles between the refinery and South Pars once a week. A full tanker would carry enough to run the refinery at capacity for about a week.
     
    With shrinking export options, traders say Iran is likely to be selling its condensate fairly cheaply, helping ENOC offset multi-million dollar losses it has to take because it is obliged under UAE law to sell gasoline at a subsidized rate.
     
    Dubai has been a key trading partner for Iran for decades, but the UAE is also one of Washington's closest allies.
     
    The UAE is the largest export market for the United States in the Middle East, with Dubai flagship airline Emirates alone having placed a $24 billion order with Boeing in 2011, according to the website of the UAE Embassy in Washington.
     
    U.S. Defense Secretary Chuck Hagel is touring the Gulf this week, with the U.S. close to finalizing a deal to sell the UAE 25 F-16 Desert Falcon jets worth nearly $5 billion.
     
    More on the way

    Unless ENOC can find another 100,000 barrels per day of alternative supplies at competitive prices, the opening of a second pipeline due later this year could take more fuel made from Iranian oil into the tanks of international airlines.
     
    The existing pipeline can carry around 9.5 million liters of jet fuel a day — enough to fill up 44 Boeing 747s a day or 16,000 a year, although most routes do not use a full tank.
     
    ENOC is not the only jet fuel supplier, because its refinery and existing pipeline are not big enough to meet demand at DXB, where an average of around 470 flights a day took off in 2012.
     
    Several western oil companies also supply jet fuel to the airport — Royal Dutch Shell, BP and Chevron — but they say they source it outside the UAE and in full compliance with sanctions on Iran.
     
    Some U.S. and European airlines said they do not use ENOC when they call at Dubai, with some having global purchase deals with other suppliers.
     
    But for many of the 130 airlines flying into Dubai, the fuel derived from Iranian oil that ENOC offers is indispensable.

    You May Like

    US, Allies Discuss Next Steps in Islamic State Fight

    Meeting comes a day after US Navy SEAL was killed while fighting Islamic State forces in northern Iraq

    In China, Traditional Banks Fight Challenge From Internet Firms

    Internet companies lent more than $150 billion to customers in 2015, which is an extremely small amount compared to the much larger lending by commercial banks last year

    Trump Faces Tough Presidential Odds Against Clinton

    Numerous national election surveys show former secretary of state defeating presumptive Republican nominee with tough talk to halt illegal immigration and temporarily block Muslims from entering country

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Press Freedom in Myanmar Fragile, Limitedi
    X
    Katie Arnold
    May 04, 2016 12:31 PM
    As Myanmar begins a new era with a democratically elected government, many issues of the past confront the new leadership. Among them is press freedom in a country where journalists have been routinely harassed or jailed.
    Video

    Video Press Freedom in Myanmar Fragile, Limited

    As Myanmar begins a new era with a democratically elected government, many issues of the past confront the new leadership. Among them is press freedom in a country where journalists have been routinely harassed or jailed.
    Video

    Video Taliban Threats Force Messi Fan to Leave Afghanistan

    A young Afghan boy, who recently received autographed shirts and a football from his soccer hero Lionel Messi, has fled his country due to safety concerns. He and his family are now taking refuge in neighboring Pakistan. VOA's Ayaz Gul reports from Islamabad.
    Video

    Video Major Rubbish Burning Experiment Captures Destructive Greenhouse Gases

    The world’s first test to capture environmentally harmful carbon dioxide gases from the fumes of burning rubbish took place recently in Oslo, Norway. The successful experiment at the city's main incinerator plant, showcased a method for capturing most of the carbon dioxide. VOA’s Deborah Block has more.
    Video

    Video EU Visa Block Threatens To Derail EU-Turkey Migrant Deal

    Turkish citizens could soon benefit from visa-free travel to Europe as part of the recent deal between the EU and Ankara to stem the flow of refugees. In return, Turkey has pledged to keep the migrants on Turkish soil and crack down on those who are smuggling them. Brussels is set to publish its latest progress report Wednesday — but as Henry Ridgwell reports from London, many EU lawmakers are threatening to veto the deal over human rights concerns.
    Video

    Video Tensions Rising Ahead of South China Sea Ruling

    As the Philippines awaits an international arbitration ruling on a challenge to China's claims to nearly all of the South China Sea, it is already becoming clear that regardless of which way the decision goes, the dispute is intensifying. VOA’s Bill Ide has more from Beijing.
    Video

    Video Painting Captures President Lincoln Assassination Aftermath

    A newly restored painting captures the moments following President Abraham Lincoln’s assassination in 1865. It was recently unveiled at Ford’s Theatre in Washington, where America’s 16th president was shot. It is the only known painting by an eyewitness that captures the horror of that fateful night. VOA’s Julie Taboh tells us more about the painting and what it took to restore it to its original condition.
    Video

    Video Elephant Summit Results in $5M in Pledges, Presidential Support

    Attended and supported by three African presidents, a three-day anti-poaching summit has concluded in Kenya, resulting in $5 million in pledges and a united message to the world that elephants are worth more alive than dead. The summit culminated at the Nairobi National Park with the largest ivory burn in history. VOA’s Jill Craig attended the summit and has this report about the outcomes.
    Video

    Video Displaced By War, Syrian Artist Finds Inspiration Abroad

    Saudi-born Syrian painter Mohammad Zaza is among the millions who fled their home for an uncertain future after Syria's civil war broke out. Since fleeing Syria, Zaza has lived in Lebanon, Egypt, Jordan and now Turkey where his latest exhibition, “Earth is Blue like an Orange,” opened in Istanbul. He spoke with VOA about how being displaced by the Syrian civil war has affected the country's artists.
    Video

    Video Ethiopia’s Drought Takes Toll on Children

    Ethiopia is dealing with its worst drought in decades, thanks to El Nino weather patterns. An estimated 10 million people urgently need food aid. Six million of them are children, whose development may be compromised without sufficient help, Marthe van der Wolf reports for VOA from the Metahara district.
    Video

    Video Little Havana - a Slice of Cuban Culture in Florida

    Hispanic culture permeates everything in Miami’s Little Havana area: elderly men playing dominoes as they discuss politics, cigar rollers deep at work, or Cuban exiles talking with presidential candidates at a Cuban coffee window. With the recent rapprochement between Cuba and United States, one can only expect stronger ties between South Florida and Cuba.
    Video

    Video California Republicans Weigh Presidential Choices Amid Protests

    Republican presidential candidates have been wooing local party leaders in California, a state that could be decisive in selecting the party's nominee for U.S. president. VOA's Mike O’Sullivan reports delegates to the California party convention have been evaluating choices, while front-runner Donald Trump drew hundreds of raucous protesters Friday.
    Video

    Video ‘The Lights of Africa’ - Through the Eyes of 54 Artists

    An exhibition bringing together the work of 54 African artists, one from each country, is touring the continent after debuting at COP21 in Paris. Called "Lumières d'Afrique," the show centers on access to electricity and, more figuratively, ideas that enlighten. Emilie Iob reports from Abidjan, the exhibition's first stop.

    Special Report

    Adrift The Invisible African Diaspora

    World Currencies

    EUR
    USD
    0.8643
    JPY
    USD
    105.91
    GBP
    USD
    0.6837
    CAD
    USD
    1.2584
    INR
    USD
    66.395

    Rates may not be current.