UAE preparing Egyptian alternative to Israeli pipeline project

EAPC signs UAE oil pipeline agreement Photo: EAPC spokesperson

If the Eilat-Ashkelon oil pipeline agreement with the UAE is canceled due to environmental concerns, the project could be switched to Taba in Egypt.

The possibility that the agreement between Israel's Europe Asia Pipeline Co. (EAPC) and the UAE's Med-Red Land Bridge (MRLB) will be cancelled is clouding relations between Jerusalem and Abu Dhabi.

Israel has already received messages that cancelling the deal to convey oil and derivative products on the Eilat-Ashkelon pipeline will have a detrimental influence on relations between the countries and sources have told "Globes" that the UAE is considering an alternative plan.

If indeed the plan is cancelled due to opposition from some cabinet ministers and the possibility of High Court rulings against the plan, the UAE is discussing the option of building an alternative pipeline through Egyptian territory. Such a pipeline would cross Sinai from Taba to El Arish, alongside the existing gas pipeline infrastructure in Egypt. According to a source familiar with the matter, the option has already been raised in internal talks in the UAE and in initial discussions with the Egyptians.

The pollution will remain, the money will go

The economic significance of cancelling the agreement would mean losing hundreds of millions of shekels in profits for government-owned EAPC and for the UAE. Building the pipeline and adding ports, end stations and terminals for transporting oil would involve much work and resources over many years.

Israeli opposition to the oil pipeline deal is mainly based on concerns about polluting Eilat Bay. But if the deal was moved to Egypt, the container terminal would be moved just a short distance southwards to the other side of the border at Taba, so that the threat of pollution would remain.

The UAE is losing faith

The UAE is not referring to the subject officially, but according to a source familiar with the matter, they are genuinely bothered by the possibility of the cancellation and see it as not keeping an agreement between the countries, thus harming the credibility of Israel and its government. The source warned, "The repercussions could extend to other areas. And at the very least, every agreement from now and in the future will require much more certainty to ensure that the terms are met."

Under the agreement, first reported by "Globes" in September before the agreement was signed in October 2020, the UAE would use the EAPC pipeline as a land bridge between Asia and Europe for convey and storing oil and derivative products. The oil would be transported from the UAE and other Asian markets via EAPC's infrastructure in Eilat and Ashkelon and onto Western markets as well as between East Asia and the Eastern Mediterranean. The agreement has more than financial significance. MRLB is a private company partly owned by Petromal, the oil and gas arm of National Holding, which is based in Abu Dhabi and is closely linked to the UAE's ruling family, and the agreement received the blessing of the UAE's leadership.

Under the terms of the agreement, the UAE would be permitted to transport 70 containers of oil per year, starting in five years (ten times the national average on the Eilat Ashkelon pipeline in recent years). The agreement is in practice being implemented today and by the end of the year 20 more containers are expected at Eilat Port. The containers will unload their oil at the EAPC port in Eilat and from there be conveyed to storage on a land pipeline to Ashkelon and onto European markets. The deal allows the UAE to transport the oil in the opposite direction from Ashkelon to Eilat and according to estimates will yield EAPC up to $700 million over eight years.

The increase in the number of containers is one of the main factors raising concerns about oil spills among environmental protection organizations. EAPC points out that in the past larger amounts of containers passed through Eilat Port when oil was bought from Egypt and at a time when the terminal was less safe and had not undergone recent improvements to protect against spills.

Discussions in the High Court and cabinet

The fate of the agreement is currently in the hands of the High Court of Justice and the cabinet. The Society for the Protection of Nature in Israel (SPNI), Adam, Teva V'Din, and Zalul jointly petitioned the High Court of Justice several months ago demanding that the agreement be cancelled. They argue that the agreement is invalid because it has not been approved by the cabinet and discussed and approved by the various government ministries involved such as the Ministry of National Infrastructures, Energy and Water Resources and the Ministry of Environmental Protection. They also argue that the agreement would deal lethal damage to the Red Sea and Eilat's coastline due to any oil spills, whether through breakdowns, accidents negligence or sabotage from enemies. This latter point has become salient following attacks on oil tankers in the Eastern Mediterranean as part of regional conflicts.

MK Yuval Steinitz told "Globes" that when the agreement was signed, he heard about it from the media, even though he was Minister of Energy at the time. This was because EAPC is under the authority of the Ministry of Finance, so no approval was required from the Ministry of Energy.

The government is due to respond to the High Court petition at the beginning of November but the situation is complicated with some cabinet ministers opposed to the agreement.

These opponents include Minister for Environmental Protection Tamar Zandberg who is vehemently against the agreement. She is supported by the chairman of her party (Meretz) Minister of Health Nitzan Horowitz and other ministers have misgivings and want further discussions on the matter.

Zandberg said that it is doubtful if it will make any contribution to the Israeli economy, while on the other hand it dramatically jeopardizes the world's most northerly coral reef and tourism to Eilat in general."

Prime Minister Naftali Bennett is himself undecided but is wary of harming relations with the UAE. A key player in the matter will be Minister of Foreign Affairs Yair Lapid who in recent days has met twice with his UAE counterpart.

EAPC said, "EAPC complies with and will comply with all the requirements of the Ministry for Environmental Protection, including demands that aren't made anywhere else in the world.

"Building an alternative at Taba, in Egyptian territory, 100 meters from EAPC demonstrates the scale of the absurdity. Israeli citizens and the State of Israel won't benefit from the huge economic, geopolitical and defense advantages of the agreement while also not being able to supervise or influence the Egyptian facility in Eilat Bay.

The Ministry of Finance said, "The position of the state will be fully presented as part of its response to the High Court."

Published by Globes, Israel business news - en.globes.co.il - on October 21, 2021.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2021.

EAPC signs UAE oil pipeline agreement Photo: EAPC spokesperson
EAPC signs UAE oil pipeline agreement Photo: EAPC spokesperson
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