Oil Price – The Abu Dhabi national oil company ADNOC plans to have a new pipeline operational in 2027 that would double its oil export capacity through Fujairah, which sits outside the Strait of Hormuz.
ADNOC plans to build a new project, the West-East 1 Pipeline, which is expected to become operational next year and double the UAE’s energy giant’s export capacity through the Emirate of Fujairah to meet global demand for energy supplies, the Abu Dhabi Media Office said on Friday.
Sheikh Khaled bin Mohamed bin Zayed Al Nahyan, the Crown Prince of Abu Dhabi, chaired a meeting of the Executive Committee of ADNOC’s Board of Directors, reviewing updates on the new West-East Pipeline project, the media office noted.
The new pipeline project couldn’t come at a better time for the United Arab Emirates, which seeks to boost its oil exports from ports outside the Strait of Hormuz now that the chokepoint is de facto closed and now that the UAE is out of OPEC, after nearly 60 years, and not bound by any production quotas anymore.
The UAE quit OPEC effective May 1 to pursue its national interests after years of quarreling with fellow cartel members over output quotas and their share of total production capacity.
For years, the UAE has been working to boost its crude oil production capacity to 5 million barrels per day (bpd) by 2027. The UAE insisted that it should be allowed in the OPEC and OPEC+ production deals to actually use more of its growing spare capacity. The country, alongside Saudi Arabia, is one of the few in the region – and the world – that held spare production capacity before the Middle East conflict began.
Now the UAE is signaling it needs to look after its own economic interests and is accelerating investment in new projects, unhindered by any OPEC or OPEC+ restrictions after leaving the cartel and the wider alliance.
With uncertainty when the Strait of Hormuz will re-open and whether traffic would resemble the free and unconditional passage from before the war, the UAE is now accelerating plans to bypass the critical oil chokepoint and monetize the expected production growth.
By Tsvetana Paraskova for Oilprice.com
