Washington, Sep 21: The Trump administration has proposed investing $5 billion in a new fund to help Middle Eastern countries rebuild energy infrastructure damaged during the Iran war and develop alternative routes for transporting oil and gas outside the Strait of Hormuz, according to a Wall Street Journal report.
The proposal, which is still under discussion, would seek another $5 billion from eight regional countries — Saudi Arabia, the United Arab Emirates, Qatar, Bahrain, Kuwait, Oman, Iraq and Jordan creating a potential $10 billion investment fund.
The initiative, known as the Partnership for Allied Trust and Construction (Pact), would be managed by the US Development Finance Corporation. Discussions with regional governments are ongoing, and the final terms could change. It is also uncertain whether all eight countries will participate.
The proposed fund comes after months of conflict severely disrupted energy infrastructure and oil and gas flows across the region. Damage to refineries, oil facilities, pipelines and natural-gas infrastructure has increased concerns over the vulnerability of Gulf energy exports.
A central objective of the proposal is to support alternative export routes that can reduce dependence on the Strait of Hormuz, a major transit route for global energy supplies. Gulf producers have already been exploring alternative pipelines, ports and shipping arrangements as disruptions continue.
However, officials in the region have raised questions about rebuilding major energy facilities while the security situation remains unsettled. There are concerns that infrastructure restored without a broader political settlement could again become vulnerable to attacks.
The conflict has also placed additional pressure on the international tanker market. Disruptions to Gulf routes have forced producers to rely more heavily on alternative transportation arrangements, while longer voyages and additional shipping requirements have contributed to higher freight costs.
Saudi Arabia and other Gulf producers have been seeking ways to move crude outside the Strait of Hormuz. Recent disruptions to Saudi infrastructure have also led to increased use of alternative loading and transfer arrangements, including routes through Oman.
The proposed US-backed fund would therefore combine reconstruction efforts with investments aimed at diversifying regional energy routes. The initiative is part of broader efforts by Gulf states and international energy companies to reduce exposure to disruptions at key maritime chokepoints.
Still, the scale of the challenge remains significant. Energy analysts and officials cited in the report estimate that repairing damaged infrastructure across the region could cost tens of billions of dollars.
Reuters said it could not independently verify the Wall Street Journal report.