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ABO: Egypt dreams of new pipelines crossing the Red Sea

Posted: June 18, 2016 at 4:21 pm   /   by   /   comments (0)

ABOThe latest agreement between the government of Cairo and Aramco is just one of the pieces that make up Egyptian strategy, created to transform the country into a regional energy hub. The aim is ambitious but feasible with the financial help of the Gulf countries.

Egypt could become a world class energy hub, not only due to recent gas discoveries in the Eastern Mediterranean, but also due to the black gold arriving from Saudi Arabia. This is the aim of the lucrative agreement signed during Saudi King Salman’s first visit to the Land of the Pyramids. The agreement will ensure large supplies of oil at discounted prices: approximately 700,000 tons of oil products per month – respectively, 400,000 tons of diesel, 200,000 tons of gasoline and 100,000 tons of mazut – amounting to a total of €23 billion, to be paid within 15 years at an interest rate of 2%. The Saudi Fund for Development will directly pay the energy giant Aramco the cost of supplies, enabling the Egyptian General Petroleum Corporation (EGPC) to pay calmly.


But there’s more: the return of the islands of Tiran and Sanafir to Saudi Arabia, announced during the Saudi King’s visit to Cairo, will allow for the creation of a new bridge to join the banks of the Red Sea and, perhaps, speed up the arrival of oil supplies destined for Europe. The new works, measuring 15 kilometers in length and named after King Salman, will pass over the island of Tiran, whose sovereignty should shortly be returned to the Saudis, and could revive an old project that was never completely abandoned: the extension of the Sumed (Suez-Mediterranean oil pipeline), an energy artery which, from the terminal of Ain Sukhna, in the Gulf of Suez, runs for 320 kilometers and flows into the offshore Mediterranean terminal of Sidi Kerir, East of Alexandria. The new pipeline would instead have to cross the Gulf of Suez, arrive at Sharm el-Sheikh, in the South Sinai, follow the course of the new “Salman Bridge” and then finally reach the Saudi terminal of Yanubu, therefore connecting to the East-West oil pipeline.

A pharaonic project which, given the current price of oil, does not seem feasible, at least for the time being. “There is no project to develop a new pipeline on this route”, as stated curtly by the spokesman of Cairo’s Ministry of Petroleum, Hamdy Abdel Aziz, speaking to Agenzia Nova. Meanwhile, Aramco has gained a foothold in Egypt, with the aim of reaching the European markets. Egypt’s Minister of Petroleum himself, Tariq al Mulla, announced that the Saudis are considering the construction of a deposit for storing crude oil in the region of Sidi Kerir, in the Mediterranean Sea. The minister also added that the Egyptian authorities are considering various new projects, including the creation of a new port to receive cargo of liquefied natural gas, butane and fuel oil. According to al Mulla, the agreement with Aramco is part of the Cairo government’s strategy to transform Egypt into a regional energy hub.

Who are the financiers?

To achieve this ambitious goal, the Egyptians depend on the Gulf countries. Saudi Arabia, the United Arab Emirates and Kuwait are the main financiers of the Cairo government, with at least $12 billion supplied to the country following the rise to power of President General Abdel Fatah el-Sisi, in 2014. Of the three members of the Gulf Cooperation Council, Saudi Arabia is Egypt’s main financier, with $5.7 billion. The Emirates and Kuwait are engaged with $4.5 and $2.7 billion, respectively.


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