A binding memorandum of understanding has been signed between the Israeli state-owned Europe-Asia Pipeline Company (EAPC) and UAE-based MED-RED Land Bridge (MRLB) to store and transport oil through the EAPC pipeline network.
EAPC says that the deal is significant for the global energy market, as its pipeline is the ‘shortest, most-efficient and cost-effective route to transport oil and oil products from the Arabian Gulf to the consumption centres in the West, and provides access for consumers in the Far East to oil produced in the Mediterranean and Black Sea regions.’
MRLB is in ‘advanced negotiations’ with a number of major oil companies for long-term service agreements. Under the terms of the MoU, EAPC will provide management services for the transmission and storage infrastructure.
The EAPC pipeline system comprises three pipelines, the largest of which is the 42”, 254 km-long Eilat-Ashkelon pipeline between the Eilat oil port on the Red Sea and the Ashkelon oil port on the Mediterranean Sea. The two other pipelines supply the refineries in Haifa and Ashdod. The oil terminals at the ports have a combined capacity of 3.6 million m3, storing crude oil and petroleum products, and provide long-term storage and blending facilities. Recent upgrades to the Eilat-Ashkelon pipeline allow crude oil to flow in both directions.
The pipeline was originally set up in the 1960s as a joint venture between Israel and Iran, before Iran’s Islamic Revolution in 1979 led to diplomatic ties between the two nations being cut. Israel assumed full ownership, although it is reported that the country still allowed the transport of Iranian oil in secret.
The UAE and Israel agreed to normalise relations in August and the signing of the new MoU followed several weeks of negotiations. The signing ceremony was attended by Obaid Humaid Al Tayer, UAE minister of state for financial affairs, Hisham Abd Ahmid Ahmid, chairman of Petromal (MRLB joint venture partner), and visiting US treasury secretary Steven Mnuchin. EAPC says that the MoU is an important milestone towards the goal of peace in the Middle East.
‘This is a historic agreement, which further broadens EAPC’s international collaborations. There is no doubt that this agreement is of high importance to the Israeli market, both economically and strategically, with joint investments extending a decade into the future. I am thrilled about this collaboration with our friends from the UAE, our neighbours in the Middle East. This commercial agreement has clear geopolitical significance,’ says EAPC chairman Erez Halfon.