The United Arab Emirates will build an oil pipeline connecting Eritrea's port city of Assab with Ethiopia's capital Addis Ababa, Ethiopia's state-affiliated Fana Broadcasting Corporate reports.

It did not give details of the project but added that a study for the pipeline would be done.

The UAE played a critical role in bringing about rapprochement between the Ethiopia and Eritrea after a two-decade long dispute over border territories.

The oil-rich Gulf state, driven by a desire to tap Ethiopia's growing economy and by a fear that rivals such as Iran or Qatar could gain a foothold, has been pushing its involvement in the region for more than a decade, news agency Reuters reports.