The scramble to build redundant energy infrastructure in the Gulf is well underway

Gulf countries are pushing ahead with what we think will be a decade-long buildout of redundant and hardened infrastructure — and a parallel investment in capabilities — as the UAE, Saudi Arabia, and Qatar absorb the lessons of the past four months.

The Strait of Hormuz is “a genuine threat,” and the only durable answer is to build pipelines that carry Middle East oil and gas to market without going through it, TotalEnergies CEO Patrick Pouyanne argued at a Paris energy conference this week. Pouyanne reached back a century for precedent, to the Iraq-Syria pipeline Total built in the 1920s: “If our predecessors did it 100 years ago, I believe we should be capable of doing it again today,” he said.

The Hormuz shock has turned Gulf energy infrastructure — pipelines, ports, storage, domestic gas — from cost centers into strategic assets. Pair it with the parallel build-out in defense and artificial intelligence capabilities (including the hardening of data centers) as well as other infrastructure and you can expect bankers and lawyers to be generating fees that will put today’s newborns into private school through their A-levels.

Three deals this week show the infrastructure leg of it moving:

#1-AD Ports is buying up the connective tissue. The Abu Dhabi-listed AD Ports Group is lifting its stake in Dubai-based feeder operator Global Feeder Shipping (GFS) to 81% from 51%, paying AED 1.1 bn to exercise a call option struck at the same enterprise valuation it agreed in early 2024, according to a press release (pdf). GFS kept cargo moving through the Hormuz disruption when other operators pulled back, and AD Ports has spent the year buying fresh exposure in Brazil, Europe, Africa, and the Middle Corridor, though it has run into obstacles where other infrastructure owners aren’t interested in parting with assets that ADP covets.

#2- Etihad Energy is building outside the strait. The company formerly known as Gulf Navigation is putting USD 300-350 mn into a 15k bbl/d refinery in Fujairah, its first move downstream, according to a DFM disclosure (pdf). It will turn naphtha into Euro V gasoline and other higher-value products. The refinery is part of a broader AED 1.5 bn, three-year plan that targets roughly 28% of Fujairah’s storage market, CEO Saif Al Hazaymeh told CNBC Arabia. Fujairah sits on the Gulf of Oman side of Hormuz, and the UAE has spent the year treating it as strategic infrastructure.

#3- And global energy majors have appetite for more Gulf gas assets. BP has signed a concession agreement with Adnoc and partners to develop the Bab Gas Cap project, taking a 10% stake — its first access to upstream gas in Abu Dhabi, Reuters reports. The project aims to feed domestic demand as well as Adnoc’s LNG export push. Adnoc will own 60% of the project, while BP and TotalEnergies will take 10% each. Other partners are Chinese and Korean state oil companies, state news agency Wam. The final investment decision isn’t expected until later this year, but BP signing up for Abu Dhabi gas while it sells assets elsewhere tells you where it rates the risk.