UAE set to bypass Hormuz with Fujairah terminal

Abu Dhabi plans to build a terminal for importing liquefied natural gas (LNG) at a port that would bypass the need for vessels to pass through the Strait of Hormuz, which has recently been threatened with closure by Iran.

“Mubadala Oil & Gas (Mubadala) can confirm it is working on a project with the aim of securing additional gas supplies to meet energy demand from the UAE’s growing economy through the development of an LNG receiving facility located in the Emirate of Fujairah,” a spokesperson from Mubadala, Abu Dhabi’s investment and development company said in a statement emailed to Arabian Business.

“The project will be undertaken incorporating the latest, proven floating LNG storage and regasification unit (FSRU) technology. The project feasibility study was completed last year and the project engineering phase has now commenced with the aim of delivering first supplies in the next two to three years,” the statement added.

Iran threatened earlier this year to close the Strait, at the mouth of the Gulf, in response to sanctions that the US and Europe are imposing because of the Islamic republic’s nuclear programme. Fujairah’s coastline is on the Gulf of Oman, which empties into the Indian Ocean.

Middle Eastern oil producers such as Saudi Arabia, the world’s largest crude exporter, and the UAE, the fifth- biggest oil producer in OPEC, want additional gas supplies to make electricity and petrochemicals and as fuel for energy-intensive industries such as smelters. Aside from Qatar and Iran, these nations have limited gas reserves of their own.

Despite concerns among the region’s oil community, the former president of Saudi Aramco last week brushed off Iran’s threats. Speaking on the sidelines of a Dubai conference, the ex-chief of the world’s richest company said he did not think closure was likely, and would not be a disaster for oil-producing Gulf countries even if it happened.

“No one will allow the closure,” Abdallah Jum’ah told Arabian Business, “the world will not allow it.”

“Also, Saudi Arabia built a 5m bpd pipeline to the Red Sea a long time ago, so everybody has been working on contingency plans. If it gets closed... I don’t think [it would be a disaster].”

Story continues below

Advertisement

FEATURED COMMENT Please click here to comment on this article

Iran first threatened to close the Strait of Hormuz in December 2011, after Washington and the EU said they would ban the Islamic Republic’s oil exports in a bid stifle its nuclear programme.

OPEC’s second biggest oil exporter reiterated its warning earlier this year, after the West went ahead with its toughest sanctions yet on Iran.