Gulf’s bypass pipeline builders have a bottleneck of their own

The Gulf’s push to bypass the strait is creating a market for pipelines — while the disruptions are making those pipes hard to deliver. Abu Dhabi’s Al Gharbia Pipe Company expects demand for long-distance oil and gas pipes to rise as regional producers develop alternative export routes, acting CEO Noritsugu Mifune told The National. Supply disruptions and delayed oil and gas investments have reduced the company’s output this year.

It already has a foothold in the projects driving that demand. Al Gharbia — A JV between Senaat, Japan’s JFE Steel, and Marubeni-Itochu Steel — has already supplied pipes for Adnoc’s West-East pipeline project and Iraq’s Majnoon oilfield. “Every country in the region is considering a new pipeline to avoid Hormuz. We expect more demand in the future,” Mifune said. The company is in discussions with Adnoc on future projects.

That demand hasn’t reached the factory floor yet. Output is expected to reach 60k tons this year against some 250k tons last year. The company targets a recovery to 200k tons next year. Contractors have postponed pipe purchases even after receiving engineering, procurement, and construction awards, CCO Junya Kako separately told Khaleej Times. For manufacturers, an awarded project doesn’t necessarily mean an immediate order.

REMEMBER- The bypass spending is already taking shape. Adnoc is building a USD 3 bn West-East pipeline with 1.5 mn bbl / d of capacity scheduled for completion next year. Saudi Arabia wants 10 mn bbl / d of crude pipeline capacity outside the Gulf within two to three years. Aramco has directly awarded Saudi pipe makers about SAR 2.4 bn in contracts since January. Iraq is also pursuing a Mediterranean outlet through Syria, although we highlighted the gap between agreements to develop export routes and financed construction.

When those orders do arrive, the steel has to arrive with them. Al Gharbia’s steel plate comes by sea from Europe, China, South Korea, and Japan, and one shipment lost about two months. A shipment bound for Khalifa Port was diverted to India’s Jakhau port, delaying delivery by about two months and forcing the company to arrange another vessel, according to Khaleej Times.

Rerouting the plate isn’t simple either: Fujairah is the alternative outside Hormuz, and it can’t fully replace Khalifa. Storage constraints and cargo size limit it, and routes through Oman and Saudi Arabia can add weeks. The longer-term problem sits further upstream: local pipe production still depends on an international supply chain. The specialized steel plate Al Gharbia uses is not currently manufactured in the UAE, according to Kako. Building domestic pipe-making capacity therefore leaves an upstream exposure: the raw material still has to reach the factory before the finished pipe can help exporters avoid the strait.

The signal: the bottleneck starts before the pipeline. Bypass capacity depends as much on procurement and delivery as on the route governments choose. Pipe makers need orders that proceed on schedule, factories need reliable material suppliers, and completed lines need functioning terminals and onward shipping. Al Gharbia’s outlook captures both sides of the investment case: a stronger reason to build alternative routes, and a harder environment in which to build them.