A deal between Saudi Arabia’s Aramco and Egypt’s SUMED pipeline operator could turn the Sidi Kerir port on the Mediterranean coast into a regional hub for the sale of Saudi crude to Europe, Egypt’s Oil Ministry said in a statement on Tuesday.
The memorandum of understanding, signed during a five-day visit by Saudi’s King Salman, will increase the volume of Saudi oil pumped through the SUMED pipeline running from the Ain Sukhna terminal on Egypt’s Red Sea coast to Aramco’s customers in Europe and will look into Aramco using SUMED’s facilities to store Saudi oil.
The ministry did not disclose current or future volumes, and gave no financial details. It also gave no timeline for the project.
“Any country that is able to use the SUMED pipeline will have a cost advantage in supplying oil to Europe,” said Sadad al-Husseini, a consultant and former senior executive at Saudi Aramco.
SUMED, which owns and operates Sidi Kerir, is half owned by state-run oil company Egyptian General Petroleum Corp. Saudi Arabia, Kuwait, the United Arab Emirates and Qatar own the rest.
The 200-mile (320-km) SUMED pipeline runs from the Red Sea to the port west of Alexandria.
The deal could see Aramco using SUMED’s storage facilities to store Saudi petrol, the statement said, as well as looking into using its new storage projects as a distribution point for Aramco’s butane gas sales in Egypt and neighbouring countries.
The move to increase Saudi Arabia’s storage capacity could frustrate Iran, whose oil flows to Europe have begun to pick up from a slow start since sanctions were lifted in January.
The Oil Ministry also said Egypt is implementing several projects including building warehouses in Ain Sukhna in order to trade butane gas and fuel oil, as well as building a maritime quay to receive LNG carriers and tankers of liquefied petroleum gas.
Saudi Arabia, along with other Gulf oil producers, has pumped billions of dollars, including grants, into Egypt’s flagging economy since the army toppled President Mohamed Mursi of the Muslim Brotherhood in 2013 after mass protests against his rule.
On Saturday, the two countries signed an agreement to set up a 60 billion Saudi riyal ($16 billion) investment fund among other investment agreements, including an economic free-zone to develop Egypt’s Sinai region, Egyptian state television reported.