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DHAHRAN, Saudi Arabia (Reuters) - State oil giant Saudi Aramco plans to launch its overhauled Muajjiz oil terminal on the Red Sea next year, lifting its total loading and export capacity to as much as 15 million barrels per day, Saudi officials said.
Located on the Red Sea, Muajjiz had been used as an export terminal for Iraqi crude through the Iraqi Pipeline in Saudi Arabia (IPSA), but it has not carried Iraqi crude since Saddam Hussein invaded Kuwait in 1990.
The pipeline was confiscated by Saudi Arabia in 2001 as compensation for debts owed by Baghdad.
Saudi Arabia had used the IPSA pipeline to transport gas to power plants in the west of the country for years before test opening it in 2012, giving Riyadh scope to export more of its crude should Iran try to block the Strait of Hormuz.
Saudi's arch-rival has in the past threatened to block the Hormuz shipping channel, through which 40 percent of the world's seaborne oil exports pass, in retaliation for sanctions placed on its crude exports by Western powers in 2012.
Bringing Muajjiz terminal online next year would boost the kingdom's total oil handling capacity to 15 million barrels per day (bpd) from 11.5 million bpd currently, Mohammed al-Qahtani, Aramco's senior vice president for upstream, told Reuters in an interview at the company's headquarters in Dhahran.
The additional capacity from Muajjiz, which will be integrated into the Yanbu crude oil terminal, will accommodate the increased volumes of fuel oil and supplies of Arabian Heavy crude oil to the Yasref, Jazan, and Jiddah local refineries.
The move will boost Aramco's ability to meet its commitments to customers and maintain its export capability from the kingdom's west coast.
"Restoring operations at al-Muajjiz will offer Saudi Aramco more flexibility in terms of its crude oil and product sales, and traffic configuration out of the Red Sea without affecting its intense operations out of the Arabian Gulf, which are largely dedicated to the Asian markets," said Sadad al-Husseini, a former Aramco senior executive and now an energy consultant.
Saudi Arabia has three primary oil export terminals, including the port of Ras Tanura on the Gulf, with an average capacity of around 3.4 million bpd and which handles most of Saudi Arabia's exports, according to the U.S. Energy Information Administration (EIA).
The Ras al-Ju'aymah facility on the Gulf has an average handling capacity of about 3 million bpd and can accommodate the largest oil tankers for crude loadings.
The Yanbu terminal on the Red Sea, from which most of the remaining volumes are exported, has an average handling capacity of 1.3 million bpd.
Reporting by Rania El Gamal, editing by Louise Heavens