UAE building pipeline to decrease dependency on Hormuz, boost Fujairah port capacity by 2027

According to a statement shared by the UAE’s media office, Abu Dhabi National Oil Co. (ADNOC) is working towards boosting the capacity of its Fujairah port on the Gulf of Oman by constructing a new pipeline that runs to this port.

The statement said that the work for the construction of the pipeline will be accelerated so that the UAE’s export capacity of crude oil can be doubled by 2027. Currently, ADNOC operates a pipeline with the capacity of around 1.5 million barrel-a-day from its oil fields to Fujairah port. However, that is less half of the oil firm’s total export capacity, reported Bloomberg.

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When Iran took control of the Strait of Hormuz during its war with the US, it was UAE’s Fujairah port which came to the country’s rescue to keep the crude export ongoing. Strait of Hormuz is a key trade waterway that controls a fifth of the world’s oil supply.

As the Strait of Hormuz remains choked due to ongoing tensions in the area, only the UAE and Saudi Arabia have managed to export oil in significant quantities by evading the key trade waterway. Their other Gulf neighbours — Kuwait, Iraq, Qatar, and Bahrain — almost completely rely on the Strait of Hormuz to take their shipments out.

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UAE’s decision to speed up the construction of the new pipeline also comes month after leaving the global oil body Organization of Petroleum Exporting Countries (OPEC), after which, it can now make decisions about its oil production and exports independently.

With this new-found independence, the UAE now plans to increase its production and exports capacity to meet the enhanced global oil need triggered by the West Asia conflict.

The two nations also signed agreements on defence and setting up of ship repair cluster in Gujarat’s Vadinar.

(With inputs from Bloomberg, Reuters)