Dubai — Israel's Europe-Asia Pipeline Co. has inked an agreement with a UAE-based company to transport oil from the Gulf state and Eastern markets to the West and vice versa, via pipelines linking the Mediterranean to the Red Sea, as part of new commercial agreements between the two countries.
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"Israeli state-owned company Europe-Asia Pipeline Company (EAPC) and MED-RED Land Bridge Ltd. (MRLB), signed a binding MOU for the collaboration in storing and transferring of oil and oil products through the EAPC pipeline network and storage tanks, from the UAE and other Eastern markets to the Western markets, and from the Mediterranean to the Far East," EAPC said Oct. 20.
Financial details, volumes and origin of oil to be transported were not disclosed.
The agreement "offers oil producers and refiners the shortest most efficient and cost-effective route to transport oil and oil products from the Arabian Gulf to the consumption centers in the West, and provides access for consumers in the Far East to oil produced in the Mediterranean and Black Sea regions," EAPC said.
"MED-RED is in advanced negotiations with major players in the West and in the East for long-term service agreements."
EAPC will provide management services of the infrastructure, enabling transmission, and storage of the oil and oil products.
MED-RED is a joint venture among three partners: Petromal, the oil and gas arm of Abu Dhabi conglomerate National Holding, Lubber Line, an international company specializing in infrastructure and energy investments, and AF Entrepreneurship, an Israeli company owned by Israeli business executives Yona Fogel and Malachi Alper, which develops and operates projects and ventures in the energy sector.
Petromal is focused on the upstream and downstream sectors through direct investment or through strategic public or private partnerships, according to National Holding's website.
The company, which has recently taken an interest in and is exploring renewable energy projects in the UAE and Africa, has three business units. The exploration and production division holds interests in producing concessions in West Africa and is pursuing other operating interests in West Africa and Central Asia, while its oil services unit provides services in the UAE and the EPC & Contracting department pursues projects including oil and gas field development.
The UAE -- OPEC's third-largest oil producer -- and Israel have struck a number of business deals after signing a peace agreement in Washington on Sept. 15. A high level UAE delegation arrived in Israel on Oct. 20 to sign other commercial agreements.
EAPC has four pipelines that include the 245 km bidirectional pipeline connecting the Red Sea port city of Eilat in southern Israel to the
Mediterranean port city of Ashkelon, with a capacity to carry 30 million mt of crude/year.
Eilat Oil Port accommodates tankers up to 350,000 dwt, with a storage capacity of up to 1.4 million cu m. Ashkelon Oil Port can receive tankers up to 250,000 dwt and has a storage capacity of up to 2.3 million cu m.
Israel consumes 10.5 million mt/year of oil, according to its energy ministry.
The UAE, which has a production capacity of 4 million b/d, sells most of its oil to Asia. The country sells mainly refined products to Europe, which are usually transported via tankers traversing the Red Sea.
JV WITH IRAN
In 2019, Ashkelon-based EAPC changed the meaning of its acronym to the Europe-Asia Pipeline Co., previously standing for the Eilat-Ashkelon Pipeline Co.
The oil pipeline company was set up as a JV by Israel and Iran in 1968 before ties were cut after the 1979 Islamic Revolution, and it is now looking at growing its international presence.
In addition to its traditional business of crude oil transport and storage services offered to Israeli and international customers, EAPC provides infrastructure services in areas such as LPG, oil products and coal. EAPC also operates a receiving terminal for natural gas from Israeli and external sources.
EAPC offers an alternative to the Suez Canal, which is limited by tanker size, and the SUMED pipeline in Egypt that only carries oil in one direction -- from the Red Sea terminal at Ain Sukhna to Sidi Kerir on the Mediterranean. And sending crude around the Cape of Good Hope is much slower and more expensive.