The CEO of the Abu Dhabi National Oil Company (ADNOC) recently revealed at an international industry forum that the east-west pipeline project aimed at bypassing the Strait of Hormuz has advanced to nearly half completion, with plans to officially commence operations in 2027. The construction pace of this infrastructure is accelerating significantly, primarily to address the current complex geopolitical environment and ensure the security and stability of energy export channels.
The project begins at the Habshan oil field in Abu Dhabi and ends at the Port of Fujairah, covering a total length of approximately 360 to 420 kilometers, including 14 kilometers of offshore facilities. Upon completion, ADNOC's crude oil export capacity will double. Situated on the coast of the Gulf of Oman, crude leaving Fujairah Port can enter the Indian Ocean directly, completely bypassing the Strait of Hormuz, a traditional choke point. Currently, about one-fifth of the global oil supply relies on transport through this strait, and its passage status directly influences fluctuations in international market oil prices.
This pipeline expansion is closely tied to the UAE's recent energy strategy adjustments. The country recently withdrew from the Organization of the Petroleum Exporting Countries (OPEC), freeing itself from production quotas, and plans to raise oil production capacity to over five million barrels per day. The new pipeline serves as a critical supporting measure for this capacity expansion plan, aiding the company in flexibly scaling up production without external quota constraints.
Regarding the impact of regional conflicts on existing facilities, the company stated that an assessment is still underway. Recent regional tensions have resulted in attacks on some civilian infrastructure; even after the conflict concludes, repair work on relevant facilities will require at least four months. This indicates that oil transportation volumes through the Strait of Hormuz may struggle to fully return to normal levels before 2027.
Beyond geopolitical risks, the official also highlighted deep-seated concerns facing the energy sector. Current global upstream investment amounts to approximately $400 billion annually, barely sufficient to offset the natural decline rate of oil fields, while global spare crude capacity remains far below ideal levels. In the short term, global inventory consumption is rapid, with effective coverage days maintained at only around 30 to 35. If this long-term underinvestment issue is not addressed, it will continue to pose sustained pressure on global energy supply in the future.
