"The pipeline will be operational in June," said Sheikh Hamad bin Mohammed Al-Sharqi, whose east-coast emirate is one of seven that make up the UAE.

Construction of the 360-kilometre (225 miles) pipeline began in 2008.

 

The pipeline will have an initial capacity of 1.5 million barrels per day rising to 1.8 million bpd, which represents the bulk of the UAE's current production of around 2.5 million bpd, Sheikh Hamad said.

 

The Habshan-Fujairah pipeline will carry oil from fields in Abu Dhabi on the Gulf to Fujairah on the Gulf of Oman.

 

Fears of a closure of the Strait of Hormuz intensified in recent months after Iran threatened to close the strategic outlet to the Gulf if Western governments kept up their efforts to choke off its oil exports in a bid to rein in its controversial nuclear programme.

 

In addition to the exports of the UAE and Iran itself, all the oil exports of Bahrain, Kuwait and Qatar are shipped through the waterway. Iraq also pumps the bulk of its exports through ports on the Gulf.

 

Saudi Arabia, the world's largest oil exporter, pumps most of its crude from its terminals on the Gulf but it can divert large supplies to terminals on the Red Sea.

 

Sheikh Hamad, however, played down the possibility of a closure of Hormuz.

 

"I do not believe there will be a war," he said, arguing that the tension with neighbouring Iran is just a "summer cloud that will clear."

 

Iran held talks on Wednesday and Thursday in Baghdad with six world powers that nearly collapsed when they demanded Tehran give up enriching uranium to the 20

percent level seen as a key step towards weapons-grade.

 

In exchange, Iran would get some inducements such as aircraft parts for its dilapidated commercial fleet and technical assistance in nuclear energy.

 

Iran, which is suffering under Western sanctions, said the inducements were far too little and countered with a demand that the P5+1 declare that it has a right to enrich uranium.

 

The two sides agreed to meet again in Moscow on 18-19 June.

 

Sheikh Hamad is hopeful that the new pipeline will "increase the geopolitical importance of Fujairah," which "lies on a meeting point of east and west maritime routes."

 

His small emirate, which has a population of just 170,000 people, wants to take advantage of its location to become an export hub for oil and gas.

 

Fujairah is already the world's third largest centre for ship bunkering after Rotterdam, in the Netherlands, and Singapore, and wants to rise up on the list.

 

At the port that was opened in 1982, expansion work is in full swing, including the construction of two new platforms to receive large tankers, as well as large reservoirs, bringing the storage capacity to around 11 million cubic metres.

 

The ruler is expecting more investments in the petroleum sector after the emirate established last year a zone for oil industries.

 

Last year also, Fujairah opened a new power plant fed by a pipeline carrying gas from Qatar through Dubai and Abu Dhabi.

 

A terminal to export liquefied natural gas is planned in Fujairah by the Abu Dhabi investment arm, Mubadala, and International Petroleum Investment Co (IPIC), which also belongs to Abu Dhabi, the richest emirate of the UAE.