UAE plans to spend billions of dollars to build new LNG export terminals to seek to avoid risks in the Strait of Hormuz

The Zhitong Finance App learned that Adnoc Gas Plc, a natural gas subsidiary of Abu Dhabi National Petroleum Corporation (ADNOC), is considering building a new liquefied natural gas (LNG) export facility outside the Strait of Hormuz. The move is the latest move by the UAE to build infrastructure to bypass this critical waterway — currently, the war in Iran has seriously disrupted the safety of navigation in the strait.

Adnoc Gas Chief Financial Officer Peter Van Driel revealed in an interview that the company is evaluating several site options located on the east coast of the UAE, but has yet to make a final decision on the relevant plans.

The construction of an LNG plant outside the Strait of Hormuz will be an important part of the UAE's goal of completely freeing itself from dependence on the Strait. Currently, the UAE is actively promoting supporting projects such as building new pipelines and expanding ports. The regional war revealed the Gulf countries' weak dependence on the Strait of Hormuz and forced them to seek alternative channels to ensure the continued smooth flow of energy exports and the stable operation of the economy.

The Abu Dhabi National Petroleum Company is also the most active company in the Persian Gulf region seeking alternative routes for crude oil export, and has even evaded surveillance by turning off ships' positioning signals. The company's ships have been attacked repeatedly during the passage through the strait — three more tankers were attacked by missiles and drones last week, bringing the total number of ships attacked to 15 since the outbreak of war in Iran.

Countries in the region are stepping up the finalization of infrastructure programmes to bypass this critical waterway. Saudi Arabia has delivered crude oil to ports along the Red Sea coast through east-west pipelines and is evaluating further expansion of export capacity; Iraq is repairing old pipelines and planning to build new channels to transport crude oil to Syria and Turkey.

If the plan is finally implemented, the UAE will be the first major exporter in the region to attempt to bypass the supply of LNG from the Strait of Hormuz. However, other suppliers, such as Qatar, are still highly dependent on this route.

Building a new facility like this would cost billions of dollars. To build a plant on the east coast of the UAE, it is also necessary to support the construction of a long-term pipeline connecting the western gas field to the project.

Adnoc Gas has now built an LNG export terminal in Ruves in the Persian Gulf. After the terminal is put into operation, it will more than double the company's annual export capacity to about 15 million tons.

Additionally, the company issued a statement on Monday saying it will advance an investment plan of 8.2 billion US dollars to increase natural gas production. Van Driel said that the company will build a number of new natural gas processing facilities to absorb the additional production and meet the growing demand in the domestic and Asian markets.

Adnoc Gas anticipates that by 2030, its profit before interest, tax, depreciation and amortization (EBITDA) will increase by 60% to respond to the expected rise in global demand for natural gas fuel. This target was raised from the previous 40% growth forecast, reflecting the company's latest investment plan.

Meanwhile, the company has restored about 85% of the operating capacity of the country's largest natural gas processing facility, the Habshan Plant, which was damaged during the war.