UAE Wants to End its Reliance on Shipping Through Strait of Hormuz
The United Arab Emirates exports about three million barrels of crude oil every day, and has been diverting as much as possible through a pipeline system to the port of Fujairah in order to keep shipments going throughout the Hormuz crisis. While it successfully shifted about two million bpd of its production onto this alternate route, it would like to do much more: having withdrawn from OPEC, it is on track to hit 5.2 million bpd of production by 2028, complete a second parallel oil pipeline, and add yet another line to carry refined products on the same route.
"[Hormuz is] going to open and we hope that will happen quickly, but we will not stop the new plan," said UAE trade minister Thani Al Zeyoudi, in conversation with Bloomberg News. "We're moving toward having zero Hormuz dependency and that's regardless of whether it's open or not."
The UAE has significant motivation to make the switch. Over the course of the past month, its state oil firm (ADNOC) has been secretly and quietly moving tankers through the Omani side of the Strait of Hormuz, with U.S. oversight and protection. The shuttle operation moved crude from the UAE's Arabian Gulf fields to the anchorage off the coast of Fujairah, where ADNOC's VLCCs would transfer their cargo to foreign-flag tankers for onward shipment to Asian markets. This was necessarily high-risk work, vulnerable to Iranian attack, and one tanker was hit by drones last month after completing an offload.
Looking ahead, according to Zeyoudi, the UAE is going to build out the infrastructure it needs to avoid all shipping through the strait. The plan is ambitious: the Emirates is going to invest in expanding Khor Fakkan, Fujairah and Dibba on its Gulf of Oman coastline, and will add one more new port, too. It will further expand its pipeline network and its road and rail infrastructure, he told Bloomberg. The cost will be significant, but in the end, the UAE will have a comprehensive terrestrial connection between its oilfield infrastructure (in the west) and its safest coastline (in the east). All this will come at a cost, but ADNOC says that its capital budget for 2025-2030 is $150 billion, which provides abundant headroom for investment.
that matters most
Get the latest maritime news delivered to your inbox daily.
The plan extends to dry goods, too. Al Zeyoudi told Bloomberg that the rail expansion would help make moving containerized freight overland cheaper - but that Jebel Ali's status as a major regional shipping hub would not be threatened.
Omnipresent, however, is the continued threat of Iranian ballistic missile and drone strikes. The U.S.-Iranian deal contains no provisions for restricting Iran's missile inventory, and critics of the agreement say that Iran will rush to rebuild its capabilities. In March and April, during the hottest phase of the U.S.-Israel-Iran conflict, Iran's missile and drone forces repeatedly hit oil and gas infrastructure around the Gulf, and the UAE was the most frequent target. While export pipelines were not as affected as other asset classes, at least one pumping station in Saudi Arabia was hit, illustrating that cross-country transport does not necessarily guarantee immunity from the disruption found in the region.
Content Original Link:
" target="_blank">
