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    Israeli OIl Pipe Operator Eyes Gasline to Turkey



Eilat-Ashkelon Pipeline considers building a gas pipeline to Turkey

by: Ya'acov Zalel

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Natural Gas & LNG News, Ministries, East Med, Israel, Turkey

Israeli OIl Pipe Operator Eyes Gasline to Turkey

Israeli Eilat-Ashkelon Pipeline Co will explore the possibility of building a natural gas pipeline between the Leviathan gas field and Turkey, reported Calcalist, a business website. EAPC is the operator of a 250-km oil pipeline between the southern town of Eilat, Israel, on the most northern point of the Red Sea, and the oil terminal in the city of Ashkelon, on the Mediterranean.

EAPC was founded as a 50-50 joint venture by Israel and Iran at the end of the '60s to facilitate secretive oil trade between the two countries when Israel and Iran co-operated closely on security issues. Some of the oil went beyond Israel, being loaded and shipped mostly to Europe. It was probably most profitable at the beginning of the '70s, when the Suez Canal was shut.

Following the 1979 Islamic revolution, Iran severed all ties with Israel and the two countries became sworn enemies as they embarked on a continuous struggle for dominance in the Middle East. At the time it was assumed that Israel was in debt to Iran for fuel shipments in the region of tens of millions of dollars. Since then a lengthy arbitration case is slowly unfolding without any firm results yet.

EAPC is registered in a tax haven and is exempted from publishing its annual reports as well as from Israeli planning and building laws and from supervision by the environmental protection ministry. Because there is no external oversight the company has become a haven for political appointments and sometimes its environmental credentials come into question.

EAPC's reported interest in building the pipeline is a surprising move since the Israeli gas monopoly partners were always adamant that a Turkish consortium of over 10 companies was ready to invest in the subsea, 500-km, $2.5bn pipeline.

During the years EAPC expanded its activities and currently it is the largest shareholder in Dorad Energy, the biggest privately owned power generation company in Israel with a 37.5% shareholding. The second largest shareholder in Dorad is Turkey's Zorlu Energy with 25% shareholding.

However, the involvement of EAPC is compatible with what Israel energy minister Yuval Steinitz said this week: when the Leviathan gas field comes online, in three years' time, a pipeline would be in place to transfer gas to Turkey. Since no Turkish consortium is coming forward, Israel might be trying to promote it itself. That would mean the burden of financing the project and the huge risks involved will be borne by the Israeli taxpayer.


Ya'acov Zalel