The Hormuz Crisis: The $5.2 Billion Pipeline India Never Built

For decades, the Strait of Hormuz has been one of the world’s most important energy chokepoints. At its narrowest, the strait is only about 21 miles wide, yet roughly 20 million barrels of oil pass through it every day around one-fifth of global consumption.

For India, the vulnerability is even more significant. Around 45% of its crude oil imports and 90% of its LPG imports depend on routes through the strait. When Hormuz remains open, that dependence can be easy to overlook. When the passage is disrupted, however, the consequences spread quickly through fuel markets, industry, transportation, and household energy supplies.

The 2026 Hormuz crisis exposed that vulnerability on an extraordinary scale. Oil prices climbed above $110 per barrel, India’s state-owned oil retailers accumulated losses exceeding ₹1 lakh crore, and commercial consumers faced tighter LPG supplies.

Also Read: The $3.3B Route That Avoids the Strait of Hormuz

Yet the crisis also revived an older idea: a subsea gas pipeline connecting Oman with India’s western coast. Known as the Middle East India Deep Water Pipeline, or MEIDP, the project had already undergone technical and commercial feasibility studies. It was designed to bypass Hormuz entirely.

The proposed pipeline was estimated to cost $5.2 billion. It was never built.

The Strait of Hormuz: The World’s Energy Chokepoint

The Strait of Hormuz lies between Iran and Oman and provides the maritime connection between the Persian Gulf and the Arabian Sea. Although the strait itself is relatively narrow, its designated shipping lanes are narrower still, with only about two miles available in each direction.

Those lanes carry enormous volumes of energy.

Saudi Arabia, Iraq, Kuwait, Qatar, and the United Arab Emirates all depend on the passage to move energy exports to international markets. In 2025, Bangladesh, India, and Pakistan imported almost two-thirds of their total LNG supplies through the Strait of Hormuz, leaving them particularly exposed to any major disruption.

There are alternative routes, but they cannot easily replace Hormuz at the same scale. Saudi Arabia has a pipeline leading toward the Red Sea, while the United Arab Emirates has a pipeline connection to Fujairah. Together, these routes handle only a fraction of the volumes normally moving through the strait.

India’s exposure is particularly pronounced. Approximately 45% of its crude oil imports and 90% of its LPG imports depend on Hormuz.

That means a prolonged disruption does more than increase the cost of imported energy. It can create shortages and force difficult decisions over how limited supplies are distributed.

Engineers and energy planners had recognized this vulnerability decades ago. One proposed solution was to bypass the strait completely.

India’s Proposed Oman-to-India Pipeline

The Middle East India Deep Water Pipeline, or MEIDP, was conceived as a subsea gas pipeline connecting Oman with India’s coast in Gujarat.

Instead of transporting gas aboard LNG tankers through the Strait of Hormuz, the proposed system would establish a direct connection between Middle Eastern gas supplies and Indian consumers.

The planned offshore route would stretch approximately 1,200 kilometers across the Arabian Sea. That distance is comparable to the length of the Nord Stream pipelines in Europe, demonstrating that long-distance subsea pipelines are technically established infrastructure rather than an entirely experimental concept.

The consortium behind the project, South Asia Gas Enterprise, known as SAGE, completed technical and commercial feasibility studies for the pipeline.

The proposed route presented substantial engineering challenges. It would descend to approximately 3,450 meters, cross two continental slopes, and pass through the Owen Fracture Zone, an active seismic region.

Despite those difficulties, the project was considered technically feasible.

The proposed pipeline would have a capacity of approximately 1.1 billion cubic feet of gas per day. According to the figures presented for the project, importing the same volume as LNG would have cost nearly $945 million more annually.

The estimated total project cost was approximately $5.2 billion.

The basic proposition was therefore straightforward: invest billions in permanent infrastructure to reduce exposure to a strategic chokepoint and potentially save hundreds of millions of dollars each year compared with importing equivalent volumes as LNG.

The challenge was not simply engineering the pipeline. It was deciding whether to commit to it.

Why the Pipeline Was Never Built

The original concept included Iran as a source of natural gas. Western sanctions effectively ended that version of the proposal.

The project was subsequently redesigned around a route involving Oman and the UAE, but new obstacles emerged. The central challenge became political and commercial commitment.

A pipeline of this scale requires long-term agreements extending across decades. India would have needed to commit to a major energy corridor and maintain diplomatic and commercial relationships supporting it for many years.

LNG offered a different model.

Instead of constructing a massive fixed pipeline, India could build LNG terminals and purchase gas through contracts with greater flexibility. There was no need to commit immediately to a decades-long pipeline arrangement or assume the same level of geopolitical exposure.

When the Strait of Hormuz appeared stable, that flexibility had obvious advantages.

The problem was that the calculation depended on the assumption that the chokepoint would remain reliably open.

The 2026 crisis challenged that assumption.

The Engineering Challenges Were Real—but Not Insurmountable

A pipeline crossing the Arabian Sea would be one of the most demanding subsea energy infrastructure projects imaginable.

The route would reach depths of approximately 3,450 meters and cross an active seismic zone. Such conditions create serious technical challenges involving pressure, geological movement, pipeline stability, installation, and long-term maintenance.

The proposed system was therefore not intended to simply rest exposed on the seabed.

The design called for the pipeline to be buried and stabilized, with engineering measures intended to allow it to accommodate geological stresses without fracturing.

SAGE also planned an offshore compression station near the Qalhat Seamount, a natural underwater ridge where the water depth falls to approximately 400 meters. The station was intended to help maintain gas pressure across the long subsea crossing.

The engineering studies addressed the route, geological conditions, depth, and pressure requirements.

In other words, the central obstacle was not the absence of an engineering concept. The route had been mapped and the technical feasibility had been studied.

What remained unresolved was the decision to build it.

What the 2026 Hormuz Crisis Exposed

On March 4, 2026, Iranian forces declared the Strait of Hormuz closed. By March 8, ten ships had reportedly been attacked and five crew members had been killed.

The disruption quickly affected India’s energy system.

The Indian government introduced emergency controls on natural gas distribution, while LPG allocations for commercial restaurants and hotels were reviewed. Commercial LPG consumption fell by 13% in March 2026 as supplies were reduced to protect household consumers.

At the same time, the Indian crude oil basket reached $113.57 per barrel.

State-owned oil retailers accumulated more than ₹1 lakh crore in losses from mid-March as domestic fuel prices remained controlled despite the sharp increase in their input costs.

The crisis demonstrated how a disruption at a geographically distant chokepoint could translate into direct economic pressure inside India.

For years, the possibility of a Hormuz disruption had been a theoretical risk in energy-security planning. In 2026, that risk became an immediate operational problem.

The pipeline designed to bypass the chokepoint, meanwhile, remained unbuilt.

Could the Pipeline Still Be Built?

The crisis has changed the context in which the MEIDP proposal is being considered.

India has already taken steps to diversify its crude oil supply. As of March 2026, the country was importing crude from around 40 countries, with approximately 70% of crude reportedly routed through alternative maritime routes.

But crude oil diversification does not eliminate India’s dependence on Hormuz for gas and LPG.

Around 90% of India’s LPG imports still move through the strait. Unlike crude oil, which can sometimes be redirected through alternative tanker routes, gas infrastructure requires substantial physical investment and years of planning and construction.

That distinction matters.

The MEIDP concept remains relevant because its purpose was not simply to diversify suppliers. It was designed to create a physical alternative to the chokepoint itself.

The underlying resource base has also changed. Gas reserves in Oman, the UAE, and Saudi Arabia are larger today than when the project was initially designed, while India’s demand for natural gas continues to rise.

SAGE is now seeking diplomatic backing from India’s Ministry of Petroleum for the project.

The political challenge, however, remains significant. A project spanning multiple countries and requiring decades of energy cooperation cannot be built on short-term political commitment. It requires sustained diplomatic and commercial support throughout its development and operation.

The Cost of Not Building It

A $5.2 billion infrastructure project can appear extremely expensive when the alternative is cheaper LNG imports and existing shipping infrastructure.

But the 2026 crisis has introduced another way of looking at the calculation: the cost of vulnerability.

Oil prices reached approximately $113 per barrel. State-owned Indian oil retailers absorbed more than ₹1 lakh crore in losses while fuel prices were held down. Industries faced controlled energy supplies, while disruptions to fertilizer flows contributed to rising food prices.

Morgan Stanley estimated that the disruption affected roughly 20% of global oil supply, describing an impact twice the scale of the Suez crisis.

Against that backdrop, the original $5.2 billion price tag of the pipeline takes on a different significance.

The pipeline could not have prevented the 2026 crisis itself. Even if construction began immediately, infrastructure of this scale would take years to complete.

Also Read: The $1BN Tower That Dubai Never Finished

But the central question is not whether it could have solved today’s shortage. It is whether building alternative infrastructure before a crisis is less expensive than confronting the consequences after a chokepoint has already been disrupted.

The geography has not changed. Iran still borders the Strait of Hormuz, and the dependence of major Asian energy importers on the passage remains a structural vulnerability.

India’s Energy-Security Decision

A pipeline connecting Oman and India would not be a quick fix. Even with full political commitment, a project of this scale could require roughly a decade of development, engineering, financing, construction, and commissioning.

Its value therefore lies in long-term resilience rather than immediate crisis response.

The 2026 Hormuz disruption has demonstrated the practical consequences of relying heavily on a single strategic corridor. It has also revived a project that had already progressed through feasibility studies but never reached construction.

The Oman-India pipeline corridor is once again being raised in government discussions, while SAGE is seeking support from India’s Ministry of Petroleum.

Whether the crisis creates enough political momentum to overcome the obstacles that prevented the project from moving forward remains uncertain.

What is clear is that the underlying vulnerability has not disappeared.

The Strait of Hormuz remains a critical energy chokepoint. India continues to depend heavily on it for LPG and gas supplies. And the proposed $5.2 billion pipeline remains, for now, a plan rather than a physical alternative.

The fundamental energy-security question is therefore no longer purely theoretical: how much should a country invest in infrastructure designed to protect against a crisis that may not happen for years, when the cost of that infrastructure can look very small once the crisis arrives?