The United Arab Emirates’ state-owned energy leader Abu Dhabi National Oil Company (Adnoc) announced a landmark $8 billion investment plan on Monday to scale up its natural gas operations, marking one of the most ambitious energy expansions in the Gulf since the nation formally exited the Saudi-led OPEC alliance. The massive capital infusion will support two major infrastructure projects: a new domestic natural gas processing train at Habshan, the UAE’s largest existing gas processing complex, and a dedicated gas export terminal at the strategic industrial hub of Ruwais.
In separate comments to Bloomberg, Adnoc Gas Chief Financial Officer Peter van Driel revealed that the firm is also evaluating a proposal to construct an additional liquefied natural gas (LNG) export terminal located outside the Strait of Hormuz. If approved, this facility would complement the ongoing expansion at Ruwais, which is already on track to more than double the UAE’s annual LNG export capacity to 15 million tonnes once completed.
Adnoc’s aggressive expansion push comes amid escalating security and supply chain disruption across the Gulf, triggered by the ongoing U.S.-Israeli conflict with Iran that has upended regional energy logistics. Qatar, the world’s leading LNG exporter, was forced to declare force majeure on autumn LNG shipments earlier this year, after multiple Qatari commercial vessels came under attack while transiting through regional waters. While Qatar partially resumed shipments following a temporary ceasefire extension between the U.S. and Iran in June, attacks on commercial shipping have continued, creating persistent uncertainty for energy exporters that rely on the Strait of Hormuz, the chokepoint through which roughly 25% of global energy trade flows.
Tensions around the strait have reshaped the UAE’s energy strategy dramatically over the past year. Multiple commercial vessels linked to the UAE have also been targeted by Iranian-aligned forces, but the nation has adopted a bolder approach to navigation, including sending vessels through the strait with their tracking systems disabled to avoid detection. A June Reuters report revealed that the UAE struck a controversial deal with Iran, paying billions of dollars in exchange for a halt to attacks on UAE shipping – a sharp reversal from earlier in the conflict, when Abu Dhabi joined the U.S. and Israel in launching dozens of strikes against Iranian targets.
Unlike some neighboring Gulf states such as Kuwait and Bahrain, the UAE already benefits from critical energy infrastructure that bypasses the Strait of Hormuz entirely: an oil pipeline that terminates at the port of Fujairah, located on the UAE’s eastern coast outside the chokehold. This infrastructure has allowed the UAE to keep exporting oil uninterrupted even as other regional producers have been locked out of global markets amid the unrest. Data from the International Energy Agency’s July report confirms that the UAE ramped up oil production to an all-time high of 4.1 million barrels per day in June, just months after its formal exit from OPEC.
Industry analysts note the UAE’s push for expanded production is rooted in long-held frustrations with OPEC production quotas. For years, Abu Dhabi invested heavily in expanding upstream production capacity, but complained that Saudi Arabia’s policy of limiting output to prop up global prices prevented the UAE from maximizing its output and revenue. Those long-simmering tensions ultimately led the UAE to announce its departure from OPEC, effective May 2026.
The UAE is not alone in moving to develop Hormuz-bypassing infrastructure. Saudi Arabia already operates the East-West Pipeline, which allows the kingdom to route oil exports through the Red Sea, avoiding the strait entirely. Industry experts project that tens of billions of dollars will flow into new bypass infrastructure projects across the region over the next decade, as energy producers seek to insulate their supply chains from future geopolitical unrest. “When we speak to our customers in the region, they say they never want to deal with this kind of disruption again,” Artem Abramov, deputy head of analysis at energy research firm Rystad Energy, told Middle East Eye. “These bypass projects will move forward.”
The UAE is already moving forward with its own second bypass pipeline to Fujairah, which is scheduled to double the nation’s oil export capacity outside the Strait of Hormuz by 2027. In a parallel development, Iraq – OPEC’s second-largest producer before the UAE’s exit – signed a deal with Syria in July to rehabilitate an oil pipeline connecting Iraq’s northern oil fields to Syria’s Mediterranean coast, a project first revealed by Middle East Eye that has received backing from the United States.