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Health 100
Armour Class 3
Structural No
Weight 10
Relative Buoyancy -4.2
Size 1x1x1
Material Cost 0.25

The Exhaust vents exhaust gases away from cylinders allowing better (cooler) cylinder performance. Heat reduces power output and if a cylinder gets too hot it will shut off.
~ In-game description

Exhaust pipes connect to other exhaust pipes or to cylinders. They are non-directional, and exhaust will attempt to exit at the closest possible location. There are variants with identical stats that connect on different sides.

When using Turbochargers, it is recommended to gather exhaust from as many cylinders as possible, before sending it through the turbos. It is even possible to connect the exhaust-pipes of several separate Fuel Engines for this.

Venting exhaust into the water does not lead to any problems. As IR-cameras do not work underwater, it is generally a good idea to make use of that.