Abu Dhabi’s state-owned International Petroleum Investment Company (IPIC) owns and nominally operates the partially operational Abu Dhabi Crude Oil Pipeline (ADCOP). Countless delays due to major technical problems have pushed the cost of the project up to $4.2bn, around 27% above the sum specified in the original construction contract awarded to state-owned China National Petroleum Corporation (CNPC). The latter is demanding $1bn from IPIC in what it says are unpaid fees. In turn some contractors have yet to be paid by CNPC.

IPIC first contracted CNPC to build the Hormuz bypass line after it completed a successful, but less challenging, pipeline for IPIC in Pakistan, where IPIC has a refinery stake. But CNPC was unable to build a fully operational pipeline that could take crude over mountains from its Habshan gathering plant in Abu Dhabi, to the port in Fujairah (see map). Problems with pumps, compressors and faulty welding have all contributed. In contrast to IPIC, state oil giant ADNOC has so far declined to use Chinese firms for its projects, and only recently began to use Korean firms after succesful project completion in neighboring Saudi Arabia. (CONTINUED - 790 WORDS)