UAE's Adnoc announces $8bn gas expansion, as it mulls Hormuz bypass

The UAE’s state-owned energy giant, Abu Dhabi National Oil Company (Adnoc), said on Monday it will invest $8bn to expand its gas business, doubling down on increasing capacity after the Gulf state pulled out of the Saudi Arabian-led energy alliance, Opec.

Adnoc said it plans to build a new domestic natural gas processing unit at the country’s largest natural gas processing facility, Habshan, in addition to a new gas export facility at Ruwais.

Separately, Adnoc Gas’s CFO, Peter van Driel, told Bloomberg on Monday that the company was also weighing plans to build a liquefied natural gas (LNG) export facility outside the Strait of Hormuz. That facility would be in addition to the facility at Ruwais that Adnoc Gas is building to more than double its export capacity to about 15 million tonnes a year.

The move comes at a time when the Gulf’s LNG powerhouse, Qatar, has declared a force majeure on LNG shipments through the autumn as a result of the US-Israeli war on Iran. Qatar relies on vessels to ship gas in liquefied form.

Iran and the US are locked in negotiations over the status of the Strait of Hormuz, the critical corridor through which roughly 25 percent of the world’s energy passes.

Qatar resumed some LNG shipments after the US and Iran extended a ceasefire in June, but Qatari vessels have been attacked while transiting Oman’s territorial waters in recent months.

The UAE’s vessels have also been struck by Iran, but the Gulf state has taken a more risk-prone approach to sending vessels through the Strait of Hormuz with their ship tracking signals turned off.

Reuters reported in June that the UAE paid Iran billions of dollars in return for a halt to attacks on the country, in an about-face for the Gulf state that launched dozens of attacks on Iran alongside the US and Israel during the war.

The UAE has also benefited from an oil pipeline that terminates at Fujairah, outside the Strait of Hormuz.

That pipeline has helped the UAE continue exporting oil even as other Gulf states, such as Kuwait and Bahrain, are effectively locked out of the market.

The UAE boosted oil production to an all-time high in June, pumping 4.1 million barrels per day (bpd) of oil, the International Energy Agency (IEA) said in a report released in July.

Like the UAE, Saudi Arabia has the East-West Pipeline, which bypasses the Strait of Hormuz via the Red Sea.

Experts told Middle East Eye that tens of billions of dollars will be spent on new infrastructure in the coming years to get around Hormuz.

“When we speak to our customers in the region, they say they never want to deal with this again,” Artem Abramov, the deputy head of analysis at Rystad Energy, previously told MEE. “These bypass projects will move forward.”

The UAE is building a second pipeline to the port of Fujairah to bypass the Strait of Hormuz, doubling its export capacity by 2027.

Meanwhile, Iraq - the second-largest producer in the oil cartel Opec - signed a deal with Syria in July to rehabilitate a pipeline from its northern oil fields to Syria’s Mediterranean coast. MEE was the first to reveal the project and its US backing

The UAE’s surging production also reflects analysts' assessments that Abu Dhabi long felt constrained by Saudi-led Opec. The UAE has invested heavily in boosting its production capacity but complained for years that Saudi Arabia, in a bid to support prices, had stopped it from producing more. The UAE left Opec in May 2026.