Roundup: Egypt says Israel's Ashkelon-Eilat oil pipeline to have limited impact on Suez Canal

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CAIRO, Feb. 2 (Xinhua) -- Egypt's state-owned Suez Canal Authority (SCA) said on Tuesday that the Ashkelon-Eilat oil pipeline inside and through Israeli territory will have limited impact on the revenues and competitiveness of the Egyptian canal.

The Ashkelon-Eilat pipeline, linking the Eilat oil port on the Red Sea coast with the Ashkelon oil port on the Mediterranean coast, is expected to impact only 12 percent to 16 percent of the crude oil travelling to the north which constitutes 0.61 percent of the total shipment of the Suez Canal, according to a SCA statement.

"The pipeline which has been stopped over the past 20 years, once re-operated, would slightly affect the total flows of trade crossing the Suez Canal," the statement said.

In October 2020, the Israeli state-owned Europe Asia Pipeline Co., formerly the Eilat Ashkelon Pipeline Co., signed a memo of understanding with MED-RED Land Bridge, a joint venture between Israel and the United Arab Emirates (UAE), to transfer oil and oil-related products from a Red Sea terminal to the Mediterranean via Israeli territory.

The SCA statement explained that 85 percent of the crude oil exports to Asia of the Gulf states, especially the UAE and Saudi Arabia, do not pass the Suez Canal.

Although the crude oil trade declined by 8.8 percent in 2020, the oil derivatives passing the Suez Canal rose by 14.2 percent with the increase in the global investments in the petrochemicals sector and petroleum refining, according to the statement.

The Economic Unit of the SCA also expected a rise in the cost and time of the shipping via the Israeli oil line instead of the Suez Canal because the goods could not be sent through the pipeline as easily as through big containers.

Europe tended to limit the use of the pipeline given its adoption of clean energy and natural gas rather than the fossil fuels that causes global warming, the Economic Unit said.

The SCA's revenues come from a diversity of sources due to the diversity of the ships' categories, said the SCA statement, adding the containers bring in 50 percent of the canal's total revenues while the crude oil makes only 6.5 percent.

The revenues of the Suez Canal reached 5.61 billion U.S. dollars in 2020 despite the COVID-19 crisis, according to an earlier statement by the Egyptian government.

"No new trade routes will affect the revenues of the Suez Canal, the shortest crossing connecting the East with the West," said the government statement.

Osama Rabie, chairman of the SCA, said the canal saw an unprecedented increase in the number of the U.S. liquidated natural gas shipments in January.

Argus Media, one of the world's largest companies working in analyzing the energy markets in 25 countries, attributed the preference for the Suez Canal by many countries to the higher costs and longer time of shipping through other competitive routes.

The Suez Canal offers incentives and discounts ranging from 35 percent to 75 percent for the liquidated gas, Argus said on its website.

The Suez Canal is one of Egypt's main sources of national income and foreign currency reserves.

About 12 percent of the world trade passes through the Egyptian canal, which is considered the most important and fastest navigation passage connecting Africa, Asia, and Europe by bridging the Red Sea and the Mediterranean Sea. Enditem

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