Key facts
- Adnoc is investing $8 billion to expand its gas business and build new export facilities.
- The UAE is considering an LNG export facility outside the Strait of Hormuz to bypass potential disruptions.
- This move follows attacks on UAE vessels and Qatar's force majeure declaration on LNG shipments.
- The UAE previously left OPEC to gain more flexibility in production decisions.
- A new pipeline to Fujairah is planned to double export capacity by 2027.
The United Arab Emirates' state-owned energy giant, Adnoc, is investing $8 billion to expand its gas business, including plans for a new export facility designed to bypass the Strait of Hormuz. This strategic move comes amid heightened regional tensions and attacks on shipping vessels in the critical waterway, through which approximately 25 percent of the world's energy passes.
Adnoc plans to establish a new domestic natural gas processing unit at its Habshan facility and a separate gas export facility at Ruwais. Concurrently, Adnoc Gas is evaluating the construction of a liquefied natural gas (LNG) export facility outside the Strait of Hormuz, which would aim to more than double its export capacity to around 15 million tonnes per year.
This development follows Qatar's declaration of force majeure on LNG shipments due to the conflict involving Iran and the US. Although Qatar has resumed some shipments after a ceasefire extension, its vessels have faced attacks in Omani waters. The UAE has also experienced attacks from Iran, prompting it to adopt a more risk-prone approach by disabling ship tracking signals when transiting the Strait of Hormuz.
The UAE has previously benefited from an oil pipeline terminating at Fujairah, outside the Strait, enabling continued oil exports. The nation recently exited OPEC, seeking greater autonomy in production decisions, and achieved an all-time high oil production of 4.1 million barrels per day in June. Experts anticipate significant investment in infrastructure to circumvent the Strait of Hormuz, with the UAE already constructing a second pipeline to Fujairah to double export capacity by 2027.