An old Israeli pipeline could take on new strategic importance as the region's alliances shift. Image: Facebook

A discreet oil pipeline dating back to the days of Israel’s alliance with the Shah of Iran holds both risk and vast promise in a shifting geopolitical landscape that pits Israel and its neighbors against Turkey.

“Anything that brings the UAE and Israel closer and diminishes the Turkish role is in our interest,” a source in the Hellenic Ministry of Foreign Affairs told Asia Times. “We hope that Israel becomes a vessel for Arab oil, replacing Turkey and its allies,” the source added on condition of anonymity.

In August, the United Arab Emirates (UAE) became the first Gulf state to normalize relations with Israel, an important step towards a new regional geopolitical order.

A month earlier, Chevron became the first major energy company to enter the Israeli market, a watershed moment that demonstrated Israel’s decades of isolation from the global oil and gas market was coming to a close.

In parallel, the Jewish state has become increasingly embroiled in rising tensions between Turkey and Greece.

The discovery of rich undersea gas reserves in the Eastern Mediterranean has sharpened long-standing animosity between Athens and Ankara. Israel, for various reasons, has joined the Hellenic camp.

In January, Israeli Prime Minister Benjamin Netanyahu signed an agreement with his Greek and Cypriot counterparts for an EastMed pipeline to ship gas from the three nations’ gas fields to Europe via Crete.

The deal counters the outsized regional ambitions of Turkey under Recep Tayyip Erdogan. The Islamist president’s policy of Neo-Ottomanism involves aggressive intervention in areas previously under the control of the aforementioned empire.

In November 2019, Erdogan claimed a shared Exclusive Economic Zone (EEZ) with the North African nation of Libya, spanning the width of the Mediterranean Sea and cutting straight through Greece’s territorial waters.

In response to Turkish drilling efforts, France has sent naval and air force components to Crete in order to warn off Ankara. And, in a first, an Arab state – the UAE – has sent its forces to the Mediterranean to enforce its interests and back up Greece’s position.

This coalescing of powers against Turkey presents significant opportunities for Israel, strategically located between the Gulf and Europe.

For the owners of Israel’s Europe Asia Pipeline Co (EAPC), now is the time to get ahead of the competition.

The UAE deal “opens a lot of doors and opportunities,” CEO Izik Levi told Foreign Policy on September 4. There is no longer a barrier, he explained, to transporting Persian Gulf oil through the pipeline and to Western European markets.

The re-purposing of the Ashkelon-Eilat pipeline, as well as the productive Israeli-owned gas fields in the Mediterranean, could conceivably restore the area to the central role it played in global energy markets before World War II.

From 1935-1948, when Palestine was a territory under a British Mandate, a pipeline connecting Iraq to the Mediterranean port city of Haifa was a primary link in the global oil trade.

When the State of Israel was established in historic Palestine, it was boycotted by the Arab League and Iraq shut off the supply of oil to Haifa.

Greek Prime Minister Kyriakos Mitsotakis (C), Israeli leader Benjamin Netanyahu (R) and Cypriot President Nikos Anastasiadis sign an agreement for the EastMed pipeline project designed to ship gas from the eastern Mediterranean to Europe in Athens January 2, 2020. Photo: AFP/Aris Messinis

The young country turned to the pro-American Pahlavi Iran for its energy needs. To facilitate the transfer of oil from the Red Sea to population centers on the Mediterranean coast, Israel built the Trans-Israel pipeline from Eilat to Ashkelon.

The 42-inch pipeline was built by both the Iranian and Israeli governments and partially funded by American billionaire Marc Rich.

Completed in 1968, the pipeline served its original purpose for a decade. However, the Islamic Revolution of 1979 ended cooperation between Tehran and Jerusalem. The Israeli government eventually nationalized the pipeline and it sank into irrelevance.

In 2003, a project allowing for the reversal of the flow of oil was completed. From then on, oil could run both ways through the pipe. The Eilat-Ashkelon pipeline thus became the Ashkelon-Eilat conduit.

The company was rebranded as the Europe Asia Pipeline Company, and Israel began to receive oil from Russia, Azerbaijan and Kazakhstan to then transfer it to Eilat and then into tankers for transport to East Asia.

The initiative to re-purpose the pipeline yet again – this time to carry oil from the Persian Gulf to Europe – is supported by all of the allies in the anti-Turkish coalition. After all, if the idea came to fruition it would limit the importance of the Kirkuk–Ceyhan Pipeline, thereby minimizing the role of Turkey in global energy markets.

While neighboring Lebanon has two pipelines connecting Saudi Arabia and Iraq to the Mediterranean via the ports of Sidon and Tripoli, these have been defunct for years. Lebanon’s own onshore and offshore exploration program has, meanwhile, been riddled with delays and corruption allegations, making it an unlikely rival in the near or medium term.

In contrast, Israel has already capitalized on its own offshore natural gas reserves to power its electricity sector and possesses a functioning Red Sea-Mediterranean pipeline.

Lebanese President Michel Aoun (front), then Prime Minister Hassan Diab (rear L) and then Energy Minister Raymond Gajar inspect a drilling ship in Beirut in February 2020. Photo: Lebanese Presidency Office/AFP

The revival of the Israeli pipeline to its glory days does not come without risks.

Large amounts of oil from the Persian Gulf traverse Egypt’s Suez Canal, which is central to the economy of Egypt, the first Arab state to sign a peace treaty with Israel.

Though the Suez Canal was expanded to double its capacity in 2015, it is still not able to handle the giant supertankers that dominate contemporary oil shipping. In addition, the Suez Canal Authority charges exorbitant fees, sometimes reaching as much as $400,000.

The Israeli pipeline has a significant advantage over the time-honored canal passage. The Europe Asia Pipeline Company claims it can offer a better service at a far lower price, particularly now that it does not have to spend a great deal of money hiding the identities of its customers for fear of retaliation from the Arab states.

EAPC chief Levi told Foreign Policy his goal is for the Israeli pipeline to capture 12% to 17% of the oil trade now transiting through the Suez, a prospect likely to rile Cairo.

At the same time, questions over the Israeli pipeline remain. In 2014, a significant rupture in the pipeline led to the most destructive environmental disaster in Israeli history. More than 1.3 million gallons of crude oil spilled into a desert nature preserve.

The company has also intentionally avoided normal corporate transparency. Since many Arab countries, at least officially, boycott oil companies doing business with Israel, the company has kept all of its business dealings secret.

These issues will need to be addressed if the pipeline becomes central to global energy markets.

The Netanyahu government will doubtless support this initiative, as it highlights the Israel-UAE peace deal, which it considers to be a major foreign policy triumph. However, officials in the Israeli Foreign Ministry are cautious.

A senior confidential source in the ministry told Asia Times that while it is unclear if the project will become significant, if it does it could have a negative impact on relations with Egypt.

“While better relations with the UAE and other Gulf States are important, our peace with Egypt is absolutely essential for maintaining regional stability. Without it, the security position of the country will devolve significantly. Therefore, we should coordinate with the Egyptians rather than attempt to harm their position unilaterally.”

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