Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Israeli Pipeline Ready to Go Russian

LONDON -- Israel's revamped Eilat-Ashkelon pipeline is ready to pump Russian and Caspian crude oil toward Asia, or resume its old route of shipping from the Middle East to Europe, the operator said Tuesday.

"The line is operational in both directions," Effie Milutin, head of the commercial department at the Eilat-Ashkelon Pipeline Co., said in a telephone interview. "It's a very unique feature."

The 254-kilometer pipeline linking the Mediterranean port of Ashkelon with the Red Sea terminal at Eilat is operational up to 400,000 barrels per day, but could be expanded to its design capacity of 1.2 million bpd, he added.

A total of 18 million barrels of storage, 8 million in Eilat and 10 million in Ashkelon, gives added flexibility.

"We're ready to pump as soon as we get a cargo into Ashkelon," Milutin said.

The route provides a much shorter link between the Med and Asia than the costly route around Africa and allows for bigger volumes than the Suez Canal, which is restricted to vessels of around 130,000 tons deadweight.

With Russian oil companies keen to break into the huge eastern market and Asian refiners eager to diversify away from their baseload Middle Eastern suppliers, the pipeline could see action soon -- if oil price economics swing in its favor.

Both Israeli ports can accommodate very large crude carriers, which carry over 2 million barrels of oil, providing arbitrageurs with economies of scale on the long-haul voyage to Asia.

In the recent past, the pipeline was underused as it pumped dwindling volumes of Egyptian crude to Israel's two refineries, market sources say, but new trade flows this year may bring it back into vogue.

In the first six months of 2003, the war on Iraq and reduced OPEC flows sharpened refiner appetite for high-sulphur crude in the United States and Asia, drawing Urals from the Mediterranean in record volumes.

Market sources estimate at least 15 million barrels of Urals has been sold east of Suez this year, or over 80,000 barrels daily, versus next to nothing over the previous several years.