Abu Dhabi-owned Mubadala Development Company and International Petroleum Investment Company (Ipic) plan to build a terminal in Fujairah, on the eastern coast of the UAE, to receive shipments of liquefied natural gas (LNG).

The joint project will allow Abu Dhabi to import gas without tankers passing through the Strait of Hormuz, which separates the country from Iran.

A floating LNG terminal is expected to be completed by the end of 2014, with the project currently in the engineering phase.

Gas demand is increasing in the UAE due to the construction of new power plants and energy-intensive industries such as metals and petrochemicals.

By building a terminal outside the Strait of Hormuz, the country can import LNG regardless of the actions of Iran, which has threatened to close the key shipping route amid diplomatic tensions with the US and the EU.

Bloomberg reported that the terminal is being designed with a total capacity of 1.2 billion cubic feet of gas a day.