The Israeli Pipeline Corporation (EAPC) announced today, Tuesday, that it has signed a preliminary agreement to help transport oil from the UAE to Europe through a pipeline linking the Red Sea city of Eilat and the port of Ashkelon on the Mediterranean coast.
If completed, the deal would be one of the largest partnerships that have come to light so far since Israel and the UAE normalized relations.
The state-owned company said it signed a binding memorandum of understanding with the MED-RED Land Bridge, a company owned by Israelis and Emiratis, in Abu Dhabi, on Monday, during the visit of US Treasury Secretary Stephen Mnuchin.
Besides UAE oil, the partners hope to use their “land bridge”, which saves time, fuel and costs compared to crossing the Suez Canal, to transport oil back and forth between other countries.
It could provide faster access for Asian consumers to oil produced in the Mediterranean and Black Sea regions.
“MedRaid is in an advanced stage of negotiations with major players in the West and the East over long-term service agreements,” the company said.
Importance to the Israeli market
She did not disclose financial details. But she said that the agreement “will likely increase the quantities transported by tens of millions of tons annually”, with the UAE exporting the vast majority of its crude to Asia.
A source familiar with the deal said that, if completed, it could be worth $ 700 to $ 800 million over several years, and that supplies could start in early 2021.
EABC, or Asia Europe Pipeline Corporation, operates a pipeline of the same name and deals in oil storage, export and import of distillates.
Mead Reed is owned by Petromal – a unit of the Abu Dhabi-based National Holding Company – Israel’s AF Entrepreneurship, and Lubber Line, an international group focused on infrastructure and energy.
“There is no doubt that this agreement is of great importance to the Israeli market economically and strategically with the extension of joint investments for a decade in the future,” said EABC CEO Erez Halfon. Under the agreement, EABC will manage storage. And transporting oil.
Currently, Gulf oil tankers, bound to the west, pass through the Strait of Hormuz in the Gulf, and from there to the Bab al-Mandab Strait (south of the Red Sea), to the Suez Canal and from there to European and American markets.
And last month, “Globes” – a specialist in the Israeli economy – said that “exporting oil to Europe through a land pipeline linking Israel and the Gulf states will help bypass the dangerous and costly shipping routes of the Strait of Hormuz and the Suez Canal.”