UAE energy infrastructure and strategic storage development

The United Arab Emirates is pursuing several strategies to enhance energy security and trade resilience in response to regional tensions and potential disruptions in the Strait of Hormuz.

To reduce dependence on the maritime route, the country is investing in new export routes, international storage capacity, and shipping fleets. Key initiatives include the development of a pipeline to Fujairah intended to double crude capacity, and a proposed 100-kilometre pipeline corridor to transport products from Al Hamriyah port to various eastern locations. Additionally, the UAE is utilizing its east coast for maritime shipments and the Etihad Rail for cargo. Further efforts involve ADNOC assessing the feasibility of a third crude oil pipeline to connect the western coast to Fujairah to mitigate risks associated with tensions between the United States and Iran.

Recent developments show India and the UAE exploring a reciprocal strategic oil storage arrangement. Following a 2018 deal allowing ADNOC to store up to 30 million barrels of crude in India, New Delhi is now considering holding part of its strategic reserves in Fujairah to leverage the logistical advantage of loading tankers outside the Strait of Hormuz.

Simultaneously, Indian state-owned refiner Hindustan Petroleum Corporation Limited (HPCL) has reported difficulties securing tankers for the Strait of Hormuz. HPCL Chairman Vikas Kaushal noted that vessel scarcity and shipowners’ reluctance to risk transits through the Strait have forced the company to pivot toward the spot market. A shortage of very large crude carriers (VLCCs), caused by ship-to-ship transfers in the Gulf of Oman, has also increased rates for smaller vessels and raised the overall cost of crude oil cargoes.