The United Arab Emirates (UAE) announced plans to accelerate construction of a new oil pipeline that will double its export capacity through Fujairah by 2027. The move is aimed at securing future crude exports amid ongoing tensions in the region.
Key Takeaways
The UAE is fast-tracking construction of a second oil pipeline to bypass the Strait of Hormuz, aiming to double its export capacity by 2027. This move comes amid ongoing tensions in the region and global energy supply pressures.
- UAE plans to complete the West-East Pipeline project by 2027
- New pipeline will double current export capacity through Fujairah
- Existing Habshan-Fujairah pipeline carries up to 1.8 million barrels per day
- UAE's oil production has dropped from 3 million to 1.8-2.1 million barrels per day due to the Iran war
- Decision follows UAE's departure from OPEC earlier this month
Abu Dhabi Crown Prince Sheikh Khaled bin Mohamed bin Zayed Al Nahyan directed the Abu Dhabi National Oil Company (ADNOC) to fast-track the West-East Pipeline project, which will connect from Fujairah on the Gulf of Oman. This pipeline is expected to start operating in 2027 and significantly expand the UAE's ability to bypass the Strait of Hormuz.
The existing Habshan-Fujairah pipeline can carry up to 1.8 million barrels per day and has been crucial for the UAE's oil exports since Iran blocked tankers passing through the strait following U.S.-Israeli attacks on February 28. The new pipeline will double this capacity.
The decision to fast-track the project comes as global energy supplies remain under pressure. The blockade of the Strait of Hormuz has disrupted about a fifth of global oil supplies, prompting governments to ration fuel and raising fears of an economic downturn due to inflation.
The UAE's departure from OPEC earlier this month highlights growing tensions with Saudi Arabia. The UAE has been investing heavily via ADNOC to increase its production capacity, aiming to produce 4.9 million barrels per day (BPD). Currently, due to the war, the UAE is producing between 1.8 and 2.1 million BPD.
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