UAE to complete second oil pipeline bypassing strait of Hormuz by 2027 | Oil
The United Arab Emirates has announced it will complete a new oil pipeline bypassing the Strait of Hormuz by next year to secure its future crude exports against the threat of disruption.
The current blockade of the vital waterway, through which 20 percent of oil and offshore gas flowed before the Iran war, is approaching the 11-week mark, causing energy prices to rise worldwide and shrinking Gulf economies.
Abu Dhabi’s crown prince Sheikh Khalid bin Mohammed bin Zayed Al Nahyan has instructed the UAE state oil company to speed up the previously undisclosed project so that the pipeline can start carrying oil from the emirates to the port of Fujairah by 2027.
The new pipeline is expected to double the UAE’s export capacity through the existing Habshan-Fujairah pipeline, which can transport up to 1.8 million barrels per day to the port on the Gulf of Oman.
This pipeline has proven vital for the UAE in maintaining oil exports, as Iran blocked tankers passing through the Strait of Hormuz shortly after the US and Israel launched an attack on February 28.
The UAE and Saudi Arabia are the only Gulf producers with pipelines that export crude outside the narrow waterway between Iranian and Omani territory.
The decision to fast-track a second pipeline comes just weeks after the UAE left OPEC after 60 years of membership, in a clear sign of a split with Saudi Arabia, the group’s de facto leader.
Leaving the oil cartel was expected to allow the UAE, the group’s third-largest oil producer, to pump more oil than the group’s future production quotas would allow when the conflict ends and normal trade resumes through the Strait of Hormuz.
But a new pipeline means the UAE can press ahead with its plan to boost oil exports even if the conflict drags on longer than expected or an eventual peace plan falls short of allowing the free flow of tankers through the waterway to return to pre-crisis levels.
The UAE’s departure has exposed long-standing tensions between Abu Dhabi and Riyadh; The Saudis normally opt for strict production quotas to keep oil prices high enough to support their economic agenda.
The exact capacity of the new pipeline has not been disclosed, but doubling its current capacity to 3.6 million barrels per day would bring the UAE’s pipeline exports closer to those of Saudi Arabia, which can transport around 7 million barrels per day from its eastern oil fields to the port of Yanbu on the Red Sea, of which 5 million barrels are exported.
