Al Gharbia Pipe Company Poised for Growth as Middle East Nations Seek Alternatives to Hormuz Strait

Abu Dhabi’s Al Gharbia Pipe Company anticipates substantial new business opportunities as Middle Eastern nations accelerate plans to construct pipelines that circumvent the Strait of Hormuz. This strategic shift comes as the vital waterway remains effectively impassable due to the ongoing Iran war.

Noritsugu Mifune, acting chief executive of Al Gharbia, a joint venture involving Abu Dhabi’s Senaat, Japan’s JFE Steel, and Marubeni-Itochu Steel, stated that demand for long-distance oil and gas pipelines is expected to increase. "Every country in the region is considering a new pipeline to avoid Hormuz. We expect more demand in future," Mifune told The National.

Gulf countries and Iraq have announced initiatives to build pipelines for transporting crude oil to international markets, addressing the ongoing disruptions to shipping through the Strait of Hormuz. The United Arab Emirates is currently expanding its 360km Habshan–Fujairah pipeline, also known as the West–East crude oil pipeline, with the aim of doubling its export capacity from the current 1.5 million barrels per day.

Furthermore, Iraq and Syria are collaborating to reactivate a pipeline that sustained damage during the 2003 US-led invasion. Saudi Arabia, the largest oil producer within Opec, is also exploring options to enhance its East-West pipeline, enabling it to serve global markets without relying on passage through the Strait of Hormuz.

US Treasury Secretary Scott Bessent recently commented that the strait could become a “worthless piece of water” within two years once new pipelines are operational, allowing Gulf countries to bypass it. He projected that approximately 70 percent of the energy typically transported through the waterway would be rerouted via pipelines.

Mr. Mifune noted that Al Gharbia has previously supplied pipes for Adnoc’s West–East crude pipeline project and for Iraq’s Majnoon oilfield, located near Basra. He also indicated that the company is in discussions with Adnoc regarding future pipeline projects.

The company is also investigating the manufacturing of pipes for hydrogen transportation, aligning with global efforts to increase the production of this low-carbon fuel to reduce emissions. Al Gharbia's pipe production reached around 250,000 tonnes last year. However, production decreased to approximately 60,000 tonnes this year, attributed to supply chain disruptions and delays in regional oil and gas projects caused by the war.

In anticipation of increased demand, the company expects to raise its production to 200,000 tonnes next year. Al Gharbia sources the steel plates required for its pipe manufacturing from Europe, China, South Korea, and Japan. The port of Fujairah has become crucial for these shipments, particularly since the closure of the Strait of Hormuz.

Junya Kako, the chief commercial officer, informed a media round-table in Abu Dhabi on Wednesday that a vessel carrying steel for Al Gharbia has successfully crossed the Strait of Hormuz, marking the first such shipment since the conflict began.