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A Secret Oil Pipeline Behind The Israel-Hamas War

The Eilat Ashkelon Pipeline that runs through the Negev desert is being targeted by the terrorists. But it could potentially be the world's largest transport system for billions of dollars worth crude oil trade between Middle East, Europe and Asia

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Map of Eilat-Ashkelon Pipeline

Everybody knows the story of how Hamas terrorists attacked a rave party in the Negev desert on the Israel-Gaza border, killing hundreds of innocent people and taking many hostages. But do you know the key catalyst behind the recent Israel-Hamas war? It is a secret oil pipeline running through the vast expanses of the Negev desert closer to the Gaza Strip, which is not only a lifeline for the state of Israel but a potential rival to the Suez Canal, one of the only two transit points between Europe and Asia for the shipping lines that carry billions of dollar worth crude oil each day. The 158-mile pipeline currently links the Israeli coast on the Red Sea with the country’s oil refineries. Naturally, something that can strengthen the Israeli economy is a cancerous eye sore for the terror groups - Hamas and Houthis - who are now targeting the choke points of the pipeline in Israel.

The pipeline, controlled by Israel's state-owned Eilat Ashkelon Pipeline Co. also re-christened as the Europe-Asia Pipeline Co. (EAPC) was the country's best-kept national secret up to a few years ago until a deadly oil spill revealed its existence. Yet in the future, EAPC is likely to be the world's leading oil transport system not only supplying oil to Israel but also instrumental in moving billions of barrels of oil safely from the Middle East to much of Europe and Asia.  

A June 2021 news report in The Arab News (Saudi's largest English newspaper) suggested that the UAE has started transporting oil to Europe via an Israeli pipeline after signing a MoU with the state-owned company in October 2020. It was also reported that Emirati vessels carrying oil had started arriving at the Port of Eilat (the region which is now facing heavy attacks by Hamas) in the south in 2021. Then, the Israeli public broadcaster also showed images of oil tankers hooked to the Eilat-Ashkelon pipeline feeding tons of oil to the pipeline.

It is no secret now that Saudi Arabia and UAE  blocked a proposal at the Islamic-Arab Summit this month to sever all diplomatic and economic relations with Tel Aviv and deny Arab airspace to Israel flights. The proposal also said that oil-producing Middle Eastern countries should “threaten to use oil as a means of leverage" to achieve a ceasefire in Gaza.

Hamas Attacks - Method in the Madness

Iranian ships bound for Europe would deliver oil to Eilat, located at the southernmost tip of Israel, along the Red Sea. From there, the oil was piped to Ashkelon, a city located on the Mediterranean coast, approximately 5 Km north of the tip of northern Gaza. The pipeline's route traversed the Sinai Peninsula, which is 200 kilometres wide, effectively separating it from Egypt's Suez Canal.

However, this collaboration came to an end with the Iranian Revolution in 1979, which drastically altered the dynamics between Israel and Iran. Following the revolution, Iran and Israel became staunch adversaries. Yet, for a brief period after the revolution, Israel discreetly allowed Iranian oil to flow through the pipeline.

EAPC had briefly managed to grab some eyeballs when a rupture in the pipeline caused the worst environmental crisis in Israel in 2014. The EAPC pipeline faded into relative obscurity again until the signing of the Abraham Accords involving the United Arab Emirates, Israel, and Bahrain in 2021. Subsequently, discussions emerged between Israel and the UAE regarding the EAPC oil pipeline, which connects the Red Sea to the Mediterranean. Notably, Israeli officials have maintained a high level of secrecy regarding the operations of this pipeline.

The importance of these trade corridors extends beyond economic vitality; they often serve as the linchpins of future conflicts… and sometimes war. Historical examples, such as the Soviet-Afghan conflict, the longstanding rivalry between Azerbaijan and Armenia, and the ongoing tensions between Russia and Ukraine, and the Israel- Hamas war, all transpired along corridors of exceptional significance. Most of these corridors crisscross the 7 choke points across the globe.

Understanding war and conflicts requires going beyond the surface-level perception of mere parties at odds. In the eyes of military strategists and geopolitical analysts, it is the fusion of geography and vested business interests that frequently ignites the flames of war. The world of international intrigue and geopolitics is rife with stories that often remain concealed beneath the surface, waiting to be unveiled.

What is the strategy behind this attack and in whose hands are the uncouth terrorists playing? Iran, Qatar, Russia, and China would be most jubilant to see Israel's oil pipeline and its Eilat project destroyed as its very existence mainly threatens these countries in the war of establishing control over the regional corridors.

How can EAPC change the dynamics of Oil transportation

EAPC has an impressive capacity of 600,000 barrels per day and a huge storage space capable of accommodating nearly 23 million barrels. Now compare this to its neighbour Suez Canal; a significant portion of the oil transported from the Gulf to Europe traverses either through the Suez Canal or Egypt's Sumed pipeline, with a daily capacity of 2.5 million barrels. The sumed pipeline’s capacity is about 1/10th of EAPC's extensive capabilities.

One of the standout features of EAPC lies in its ability to handle massive supertankers known as VLCCs (Very Large Crude Carriers), capable of transporting up to 2 million barrels of petroleum. Au contraire, the Suez Canal, constructed over 150 years ago, grapples with limitations tied to its depth and width, restricting it to accommodating vessels known as Suezmax, with only half the capacity of a VLCC. Consequently, oil traders who traditionally charter two ships through the Suez Canal will have to pay for a single VLCC ship they send through Israel. With one-way fees through the Suez soaring to an estimated $300,000 to $400,000, the EAPC pipeline can afford to provide its customers with a substantial cost advantage.

Until not so long ago, ships docking at Ashkelon (Northern Israel) were prohibited from accessing GCC ports, prompting EAPC's customer shipping companies to employ elaborate tactics, including multiple registrations and other stratagems, to conceal their identities. This is one reason why Israel never shared too many details about EAPC, that would have hurt its customers.

This convoluted web of secrecy surrounding EAPC can be attributed to one more factor, which is-- Israel sharing its profits with Iran. In 2015, a Swiss court ruled that Israel was obligated to pay Iran approximately $1.1 billion as a share of the profits stemming from their joint ownership of the EAPC pipeline. However, Israel declined to comply with this compensation ruling. The reason for Israel’s resistance is not difficult to comprehend. The present Iranian regime has refused to cooperate with Israel, peace and profit sharing can not be expected at least in the near future.

The war for control over regional corridors

In the complex web of global geopolitics, there exist seven pivotal geographical maritime choke points that play a vital role in shaping the world's strategic landscape. These choke points, often narrow passages, serve as critical connectors between larger regions and are typically characterized as straits or canals through which substantial volumes of maritime traffic flow. It is worth noting that three of these crucial choke points are nestled within the Middle East, adding a layer of complexity to the region's perennial challenges. This explains why the Middle East has witnessed perpetual turmoil.

The Middle East's intricate geopolitical dynamics become clearer when one takes a closer look at its geographical layout. The trio of choke points in the Middle East, namely the Suez Canal, Bab El Mandeb, and the Strait of Hormuz, serve as linchpins in the international supply chain and the maritime transportation of goods. Two of these choke points lie right next to Israel and one is slightly away, near UAE.

Suez Canal: On average, 50 vessels pass through the Suez Canal every day. Bab

El Mandeb: Around 47 ships cross this strait daily.

Strait of Hormuz: Nearly a fifth of the world's total oil moves through this region

Remarkably, even in this era of technological advancements, approximately 80 per cent of global trade continues to rely on maritime shipping routes. This fact adds to the significance of the choke points listed above.

Notwithstanding the disruption in the Suez Canal in 2020, Egypt's Suez Canal Economic Zone accomplished a behemoth agreement in October, amounting to a staggering $6.75 billion, with China Energy. Simultaneously, Qatar has pledged a substantial $5 billion investment in the Egyptian economy. It's worth highlighting that Egypt has rarely witnessed such substantial foreign investments in its recent history.

In the event of any unforeseen complications or setbacks in the operation of the Suez Canal, China and Qatar would bear the brunt of the repercussions, without an iota of doubt. Loss of business in the Suez Canal will hurt both these countries.

In recent decades, Egypt and Israel have cultivated a noteworthy level of cooperation, with significant consequences for the region's geopolitics. The activation of the Eastern Mediterranean Pipeline Company (EAPC) to its full operational capacity will jeopardise this partnership. This endeavour is not without controversy, as it is poised to siphon off a substantial portion, estimated at 10-12 per cent, of Egypt's lucrative business conducted through the Suez Canal. The potential ramifications extend beyond Egypt's borders, raising concerns for third-party stakeholders, including China and Qatar, who have vested interests in the Suez Canal.

The situation is further complicated by Israel's need to navigate this challenge without sacrificing this delicate diplomatic tie with Egypt, its neighbouring nation, at the altar of trade. This demands a delicate balancing act on Israel's part, as it seeks to maintain regional stability and secure its energy security.

EAPC has a unique capacity to transport oil unloaded in Ashkelon from ships dispatched by producers, such as Azerbaijan and Kazakhstan, to tankers stationed in the Gulf of Aqaba. These tankers are destined for far-reaching destinations, including China, South Korea, and various other regions within Asia. The significance of this dynamic lies not only in the energy trade but also in its geopolitical implications.

Azerbaijan, in particular, stands out due to its multifaceted relationship with Israel, encompassing both trade and military cooperation. This bond, while strategically beneficial, complicates the geopolitical landscape in the region. In contrast, Azerbaijan's historical rival, Armenia, enjoys the support of Iran, primarily stemming from their long-standing bonds and trade relations.

Both Armenia & Azerbaijan play pivotal roles in the International North-South Transport Corridor (INSTC), which links Russia to Iran via Azerbaijan, extending to India, facilitating the transportation of goods to other parts of Asia. It is essential to underscore that while Russia is the most sanctioned country in the world and Iran fares slightly better vis-à-vis sanctions, making the preservation of the INSTC of paramount importance for them. They are unlikely to entertain any potential competitors that could challenge their business through this strategic corridor.

In the backdrop of these intricate geopolitical developments, we observe the emergence of the Indian Middle East to Europe Corridor (IMEC). This corridor fosters trade and connectivity between India, the Middle East, and Europe. Notably, the Middle East segment in this equation is largely limited to key players such as Israel, the United Arab Emirates (UAE), and Saudi Arabia. IMEC is poised to become a strategic rival to INSTC, further heightening regional tensions.

This geopolitical chessboard underlines how conflicts such as Azerbaijan and Armenia, reverberate across continents, and are connected to the Israel-Hamas war. The ongoing Israel-Hamas conflict in the Middle East is emblematic of the intricate interplay between regional tensions and global geopolitics, where every move carries consequences that ripple through the intricate fabric of international relations.

The End Game

In the present scenario, Iran's potential to disrupt the Eilat and Ashkelon pipeline casts a looming shadow. If Iran manages to hurt the Eilat and Ashkelon pipeline, it will be able to avenge its loss of business through EAPC thereby exacerbating the challenges faced by key players, including Israel, the United Arab Emirates (UAE), and Saudi Arabia.

Simultaneously, the Israel-Hamas conflict has managed to stretch the United States thin, with a significant concentration of its naval assets in the CENTCOM (Central Command) region, which encompasses the Middle East. This strategic realignment compels the United States to prioritize its support for Israel over other global concerns, notably Ukraine. This shift in focus aligns with Russia's interests, allowing it to capitalize on the situation.

In this chaos, there are two relatively silent yet influential actors, namely Qatar and China, who are poised for significant repercussions. Their substantial investments in the Suez Canal stand to be adversely affected if the EAPC attains its maximum operational capacity. The economic implications of this disruption could reverberate across multiple industries and further intensify the ongoing geopolitical dynamics.

Israel- Hamas war by media narrative has been turned into a civilizational conflict. But is it? It is business interests that each player is attempting to safeguard. This is a war of corridors!

The author is a well known strategic affairs expert and a defense analyst

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

Levina Neythiri

The author is a well known strategic affairs expert and a defense analyst.

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