By Hessam Saroukhani, Managing Director of Pressbolt Middle East
Let’s begin with “A Bit of Optimism” …
I hope Simon Sinek will forgive me for borrowing the spirit
of the title of his popular podcast, A Bit of Optimism, because after
everything our industry has experienced this year, I believe there are still
reasons to look ahead with optimism.
Very few could have imagined how quickly disruption around
the Strait of Hormuz could reshape the global energy conversation across so
many different areas. What has happened has served as a major wake up call, not
only for the energy industry, but also for governments around the world.
For many years, much of the global energy discussion has
focused, understandably, on sustainability, decarbonisation and reducing carbon
footprints. These priorities have not disappeared, nor should they. But recent
events have brought another fundamental issue back to the centre of the
conversation: energy security.
Countries have been reminded that having energy resources is
one thing, but being able to reliably produce, transport and deliver those
resources to the market is something entirely different.
I am not going to go deeply into the geopolitical side of
the situation. Instead, I would like to look at what it could mean for those of
us working within the energy supply chain, particularly in industries connected
to hydrocarbons, infrastructure and major energy projects.
A brief look around our region shows how quickly the
conversation has already changed.
Projects and infrastructure that were previously considered
too costly, too ambitious or simply not urgent enough are suddenly being viewed
through a very different lens. In the UAE, expansion of the West East crude
pipeline towards Fujairah has become a strategic priority. The project is being
accelerated with the objective of substantially increasing the amount of crude
that can reach Fujairah and the Gulf of Oman without passing through the Strait
of Hormuz. At the same time, additional port capacity on the eastern coast and
the development of regional rail and land transport corridors are taking on a
completely different strategic importance.
Across the border, Oman is increasingly demonstrating the
importance of its geography. Sohar, Duqm and Salalah provide access to the
Arabian Sea and Indian Ocean, and their growing integration with road and rail
networks across the GCC gives the region alternative routes for cargo,
equipment and potentially energy products.
Saudi Arabia is also
reconsidering the capacity of its East West pipeline system towards Yanbu on
the Red Sea.
Further north, Iraq is revisiting alternative export routes
towards the Mediterranean and Red Sea. Syria is once again appearing on the
regional energy transit map with discussions around a new crude pipeline
towards Baniyas on the Mediterranean coast. The long discussed Basra to Aqaba
corridor through Jordan has also returned to attention, while Iraq continues to
consider greater use of routes through Türkiye and Ceyhan.
Kuwait, which remains heavily dependent on exports through
the Gulf, has also been exploring whether Saudi Arabia or UAE pipeline
infrastructure could provide additional export flexibility?
The same thinking is extending beyond pipelines. Regional
railway connections are becoming increasingly important.
The UAE and Oman rail connection was already under
development before the current disruption, but recent events have made its
strategic value even clearer. Meanwhile, proposals for a railway corridor
linking Saudi Arabia through Jordan and Syria towards Türkiye demonstrate how
regional transport networks could eventually become part of a much broader
energy and trade security strategy.
None of these ideas are entirely new.
Many have existed on drawing boards for years. Some were
delayed because of economics. Others because of political uncertainty, security
concerns, financing, Final Investment Decisions or simply because there was no
immediate need to justify such significant expenditure.
What has changed is the calculation.
Infrastructure that previously looked like expensive
redundancy is increasingly looking like strategic resilience.
Perhaps nowhere is this change more significant than here in
the UAE.
The UAE's decision to
leave OPEC and OPEC+ effective 1 May 2026 represents a major change in the
country's energy strategy. It gives the UAE greater flexibility in managing its
production according to market requirements and its own long term economic
strategy while continuing to position itself as a responsible global energy
supplier.
ADNOC is targeting
crude production capacity of five million barrels per day by 2027, compared
with approximately 4.85 million barrels per day of capacity today. Achieving
and commercially supporting this scale is not simply about drilling additional
wells. It requires an entire ecosystem around it: pipelines, processing
facilities, storage, export terminals, offshore structures, logistics, power
infrastructure and, importantly, the industrial supply chain required to build
and maintain them.
This is where I see the opportunity for UAE industry.
At the recent Make it with ADNOC Forum, ADNOC announced more
than AED60 billion of local manufacturing opportunities through 2030 covering
more than 200 essential products and critical spare parts.
These are very significant numbers, but the opportunity goes
beyond the value of the projects themselves.
Every additional pipeline, processing facility, storage
terminal, drilling programme or offshore development creates demand further
down the supply chain. Steel, piping, valves, flanges, fasteners, gaskets,
fabrication, drilling equipment, electrical equipment, inspection, testing and
logistics all have to come from somewhere.
And this may lead us to the next challenge.
The next bottleneck in the energy industry may not
necessarily be capital. It could be execution capacity.
Manufacturing capacity cannot be created overnight.
Qualified suppliers cannot simply double their output tomorrow. Raw material
mills operate with production schedules. Special grades require longer lead
times. Approved manufacturers have finite capacity. Inspection resources,
testing facilities, logistics and skilled manpower also have limitations.
If many of the projects currently being discussed move into
execution during a similar period, the industry will need to think differently
about how it manages its supply chain.
Customers may need to engage manufacturers earlier.
Procurement strategies may have to look beyond the lowest purchase price and
consider capacity, reliability, lead time, inventory and proximity to the
project.
This is also where localisation moves beyond being simply an
economic policy or an ICV objective.
Local manufacturing is increasingly becoming part of energy
security itself.
Having qualified manufacturers close to the projects
provides greater visibility, shorter response times, reduced exposure to
international logistics disruption, easier inspection and the ability to react
quickly when project priorities suddenly change.
For those of us already manufacturing in the UAE, this
development brings both opportunity and responsibility.
At Pressbolt Middle East, we have seen first hand how
quickly project priorities can change and how customers increasingly expect
manufacturers to respond to urgent requirements, changing delivery schedules
and supply chain disruption. It reinforces our belief that investment in local
manufacturing capability, people, machinery, raw material availability and
technical competence will become even more important in the years ahead.
And perhaps this is where my little bit of optimism comes
from.
Not from the circumstances that brought us here, but from
the response they have triggered.
The Middle East is being pushed to think differently about
how energy moves, how infrastructure is designed, how countries connect with
each other and how much industrial capability needs to exist closer to the
source of production.
The UAE in particular now finds itself in a unique position.
Greater flexibility in its energy policy, ambitious production capacity
targets, substantial investment in infrastructure and a clear drive towards
local manufacturing are coming together at the same time.
For manufacturers, contractors, technology providers and the
wider supply chain, that represents an opportunity we should be preparing for
today rather than waiting for tomorrow.
Because energy
security will no longer be measured only by how much energy lies beneath the
ground.
It will increasingly be measured by our ability to produce
it, process it, manufacture for it, move it and ultimately deliver it when the
normal route is no longer available.
And for our industry, that may indeed provide a little bit of optimism.