Abu Dhabi investment companies Mubadala and International Petroleum Investment Company (IPIC) are commission a strategic floating LNG import and re-gasification unit facility in Fujairah which will avoid the Strait of Hormuz.
The UAE’s energy security has been at issue as international pressure against the Iranian regime over inspections of its nuclear program has been met with defiant rhetoric and shows of strength by the Revolutionary Guard in the Strait.
The emirates have required more gas than they have produced since 2007.
Mubaladala and IPIC – branded under the joint venture as Emirates LNG – have not yet given details of contracting for the design or construction of the terminal or attendant pipeline, though Bloomberg reports a feasibility study for the terminal has been completed. The unit will be constructed in two phases, reaching a final import capacity of 1.2 billion standard cubic feet of un-liquified gas per day.
The UAE has already taken some steps to mitigate its exposure to Iranian naval capabilities in the Strait. A pipeline from Habshan in Abu Dhabi to Fujairah has been constructed, and after issues between the contracting parties and ADCO will see crude from Abu Dhabi’s onshore fields pumped onshore past the Strait.
Mubadala is a partner in the Dolphin project, a pipeline with transports Qatari gas to Abu Dhabi, Dubai and Oman.
Inter-GCC power politics and a desire by Qatar to realise the highest price possible for its gas have stymied progress on a more comprehensive pan-GCC gas network. Qatar is set to maintain a moratorium on gas export projects until at least 2015, which precludes further negotiation for the UAE and Oman to acquire further gas through the Dolphin pipeline.
The standoff between Qatar and its potential GCC customers has driven Qatar’s neighbours to pursue some extreme gas projects of their own, from the Empty Quarter in Saudi – which has largely been a failure – to the hazardous Shah ultra-sour gas field in Abu Dhabi.
Iran seems to have reassured Gulf neighbours recently with both a former head of Saudi Aramco and Kuwait’s ruler Sheikh Sabah al-Ahmad al-Sabah both telling the media that Iran will not close the Strait.
In a statement on 22 March Emirate LNG confirmed that the project was underway, but were not available for comment at the time of writing. The terminal is slated to accept its first LNG imports in two to three years’ time.
