DMEA: Pipe freeze and sanctions scrutiny

This week’s DMEA covers the freezing of a controversial pipeline deal while revelations have been made about the company at the heart of Iran’s ongoing oil trade.

Israel’s Ministry of Environmental Protection this week announced that it was delaying the development of an oil transmission project that will pipe Emirati oil from the Red Sea directly to the Mediterranean.

The pipeline’s backers had submitted an environmental risk assessment in response to a challenge by parties concerned that the project would heighten the risk of an oil spill.

Despite claiming the risk from increased crude flows was minute, the Europe Asia Pipeline Co. (EAPC) – formerly Eilat Ashkelon Pipeline Co. – was informed by the ministry that the report “did not meet the [ministry’s] conditions”, adding that it was “delaying the evaluation of your preparations to increase activity in the Eilat port, until the government has a discussion and reaches a decision” on the development.

The new old pipeline, first built in the 1960s to transport Iranian oil to Israel, is being repurposed by its new owner the EAPC to help RED MED Land Bridge Co., a joint venture between Israel and the UAE, to transport UAE-origin crude oil and oil-related products from the Red Sea to the Mediterranean without traversing either the Suez Canal the or Strait of Hormuz, providing that the crude was exported from the eastern emirate of Fujairah.

Meanwhile, despite having been blacklisted by the US two years ago, China Concord Petroleum Co. (CCPC) is reported to have become a key player in the trade of Iranian oil. Sources told Reuters that the company has acquired at least 14 tankers to ship oil from Iran or Venezuela to China, taking its total capacity to around 30mn barrels.