A decade of UAE investments in Egypt’s ports and energy is turning into a hedge against Hormuz

The UAE’s state-backed investors have spent close to a decade buying into Egypt’s gas fields, petrochemicals, fuel stations, and ports. With traffic in the Strait of Hormuz still down to a trickle amid ongoing attacks, that portfolio is starting to look less like a set of emerging-market wagers and more like an ins. policy. Egypt offers Gulf capital something it can’t build at home: two coastlines on either side of the Suez Canal and a gas market hungry for investment.

The latest piece is a storage hub on the Mediterranean. In August, Egypt approved a 737.9k-sqm private freezone in New Alamein for Fujairah Alamein Oil and Gas Co., a JV with Fujairah. The zone sits next to El Hamra Petroleum Port and will store and trade crude and refined products, all of which are slated for export. It is the commercial base for Fujairah’s USD 3 bn oil logistics buildout at El Hamra, which grew out of three agreements signed last October, including one to supply petroleum products to EGPC. Separately, a USD 457 mn expansion of the port with state-owned Wepco aims to more than double El Hamra’s crude storage to 5.3 mn barrels by December. Egyptian Prime Minister Moustafa Madbouly met Fujairah officials last month to push the project into implementation.

It’s part of a broader hedging strategy the UAE has been building at home all year. Adnoc has been shuttling crude out of the Gulf to transfer points like Fujairah so buyers can collect it without sending their own ships through Hormuz. On the container side, Gulftainer’s Khorfakkan terminal has gone from a low-key transshipment hub to the UAE’s main gateway outside the strait.

Why it matters: Abu Dhabi is already routing around Hormuz at home, and Alamein extends that logic across the Red Sea. The Habshan-Fujairah pipeline has carried the UAE’s Hormuz bypass through the war. Adnoc is fast-tracking a second line to double crude flows through Fujairah by 2027, part of what Foreign Trade Minister Thani Al Zeyoudi calls the goal of “zero Hormuz dependency.” Fujairah itself is not out of range: Iranian drones targeted the port in March. El Hamra gives Fujairah-linked operators storage on the Mediterranean — on the European buyer’s side of the canal. It also gives Egypt a supply buffer it currently lacks.

Investors have been building toward this for years, driven by two motivating factors: “Egypt’s growing need for investment to reverse declining domestic production and the UAE’s broader strategy of expanding its international energy portfolio,” Natalia Katona, commodity analyst at Oilprice, tells EnterpriseAM.

The UAE has been in Egypt’s energy sector since at least 2018. Mubadala bought into the Shorouk concession, home to the Zohr field, that year. Dubai-owned Dragon Oil agreed in 2019 to buy BP’s Gulf of Suez assets, including its stake in the Gulf of Suez Petroleum Company (Gupco). In 2023, ADQ paid USD 800 mn for 35% of Egyptian Linear Alkyl Benzene (Elab), 30% of Egyptian Ethylene and Derivatives (Ethydco), and 25% of Egyptian Drilling Company.

A logistical hedge, bought before it was needed

“Egypt offers a logistics position that is not dependent on a single strait. That’s what Abu Dhabi is buying,” supply chain analyst Wolfgang Lehmacher tells us. Egypt became attractive “not because it was cheap,” he says. Red Sea attacks, and now the war, made it “almost a necessity” for Gulf states trying to spread their exposure.

The turning point was Ras El Hekma. ADQ’s USD 35 bn pact to develop Ras El Hekma on the North Coast came in 2024, when Egypt was short of foreign currency. The agreement helped unlock a USD 8 bn IMF financing package. Lehmacher calls it a “golden moment.” UAE operators already had a foothold in Egypt’s ports: DP World has run Sokhna since 2008, and ADQ bought into Alexandria’s main container operator in 2022. AD Ports has since picked up pace, signing new concessions at Sokhna and a 50-year agreement for an industrial and logistics zone at East Port Said. That gives UAE operators access to both of Egypt’s coasts — on the Med and on the Red Sea.

Gassed up in upstream

Egypt’s shrinking gas output has been the main driver of upstream investment, says Katona. Production averaged c. 3.8 bcf / d in 1H 2026, about 44% below the same period in 2021, while demand kept climbing.

This summer, Egypt kept the lights on, but it paid heavily to do so. The grid hit a record 40.2 GW peak in August without returning to load-shedding. That took 7.94 mn tons of LNG imports in the first seven months of the year, more than double the same period in 2025, plus Israeli pipeline gas pushed to its ceiling and fuel oil as a backup. The two summers before were harder: gas cuts in 2024 and 2025 forced fertilizer producers to scale back or halt output, including Abu Qir, EgyFert, and Mopco.

This is why gas matters more than oil: “Natural gas investments are considerably more important for Egypt’s economy than incremental oil production,” says Katona. Gas runs both power generation and the fertilizer industry. That gives UAE-backed upstream gas assets more weight than conventional oil investments, she adds.

Egypt has paid off the debts that drove investors away. Arrears to international oil companies stood at USD 6.1 bn in 2024 and dragged down investment and output. The government fully cleared them in June. “The government’s efforts to settle these obligations and improve upstream contractual terms have helped support renewed investment,” says Katona.

Cairo sweetens the offer

The long-term prize for the UAE is not just Egypt’s gas market but a potential Eastern Mediterranean gas hub, “particularly if additional regional supplies become available for processing, domestic consumption or eventual re-export,” says Katona.

Arcius is the clearest example. BP holds 51% and XRG, Adnoc’s international investment arm, owns 49% of the JV, which was set up in 2024. BP contributed its existing Egyptian assets, including its stake in Zohr. Arcius’s first work is in Egypt: the North Damietta concession and the Harmattan field, which reached a USD 500 mn final investment decision with Egas in April. A deepwater exploration campaign starts with the West Atoll well.

Better terms have made projects investable: The government has raised the price it pays foreign partners for selected production and loosened production-sharing terms. Wood Mackenzie counts Harmattan among the projects where more flexible fiscal terms helped secure an FID, EnterpriseAM’s Egypt desk reported in its Power Trip series.

Where the hedge gets thin

Midstream and downstream are a harder sell: “The commercial [prospects] in midstream and downstream are constrained by the structure of the domestic market and the country’s geographical exposure to regional shipping disruptions,” Katona says. State-controlled fuel prices keep margins thin and returns unpredictable. Infrastructure tied to trade is also exposed to disruptions around the Suez Canal and Bab El Mandeb, which can cut transit volumes and push up freight and ins. costs, she adds.

That exposure applies to Alamein too. Barrels heading from Fujairah to the Mediterranean still have to pass through Bab El Mandeb to get there.

A backup, not a fix

Egypt gives the UAE storage and a foothold beyond Hormuz, but it doesn’t replace Fujairah. The Alamein zone is built for export, and El Hamra’s expanded tanks will sit on the Mediterranean. But the barrels that fill them still have to come from the Gulf, and Fujairah remains the starting point for that trip.

Looking ahead: “The last 10-15 years have been an Egypt moment already that became bigger,” says Lehmacher. The geopolitical environment is likely to sustain the appeal of such investments, he says. The bigger point is their longevity: 30-year concessions mean the ports, railways, and energy infrastructure will likely outlast today’s crises.