Israel’s Russian-oil pipe on track

Andre Manor, the Eilat-Ashkelon Pipeline Co’s deputy general manager of operation and commerce, said the company was currently reversing the pipeline’s flow to be able to move Russian crude from Ashkelon in the Mediterranean to Eilat in the Red Sea. “We do not expect any delays unless there are unforeseen events,” he said.

The pipeline would offer international oil companies access to Asian buyers who rely heavily on Middle East producers for imports and are seeking to reduce their dependence. EAPC is focusing on recruiting Russian companies and is also reported to have been talking to Asian buyers, who have been asking technical questions about the project. “We have not entered into formal negotiations. We have presented the project to two or three Russian companies and some Asian buyers,” Manor said, although he declined to name any of the companies.

The pipeline would initially pump far below its capacity of 1.2 million brl/d. However, although traders are watching to see how much Russian oil will move through the pipeline and compete with other crudes, it is not only its flow capacity that is of interest. The pipeline was partly built by Iran, and is alleged by traders to have handled Iraqi crude in a country that is the bitter enemy of Iraq and Iran. Iran is believed to still have a stake in the pipeline, which was built in 1968 in co-operation with the late Shah before the 1979 Islamic Revolution.

The pipeline has already been used to transport oil from neighbouring Egypt, but shipping agents said the flow has fallen due to Cairo’s objections to Israel’s policies toward Palestinians. Aside from offering Russian companies quicker access to the high-demand Asian market, EAPC hopes to promote the pipeline by offering storage facilities as well. If the pipeline plan takes off, it would lower the cost of sending crude to Asia and widen the level at which it is economical to ship crude to the region, potentially changing trading patterns.

Leave a Reply

Your email address will not be published. Required fields are marked *

Send this to a friend