The UAE has signed an agreement with Qatar on the construction of the first sub-sea gas pipeline connecting the two Gulf states.

Representatives from the two neighbouring states have signed an agreement that permits Dolphin Energy, a joint venture of Occidental Petroleum Corp, Total and Abu Dhabi, to build a pipeline with the capacity to pump at least 2bn cubic feet a day of gas from Qatar to the UAE.

JGC Corp, Japan’s biggest engineering company, won a US$1.6bn contract from Dolphin in January to build a plant in Qatar that will refine the gas before it is piped under the sea to Abu Dhabi and Dubai. Industry sources pointed out Occidental and Total plan to pump natural gas to meet rising demand in the Middle East to fuel power and water desalination stations.