JERUSALEM (Reuters) - Israeli pipeline company EAPC said on Tuesday it had signed a preliminary deal to help transport oil from the United Arab Emirates to Europe via a pipeline that connects the Red Sea city of Eilat and the Mediterranean port of Ashkelon.
If finalised, the deal will be one of the most significant partnerships to emerge so far since Israel and the United Arab Emirates normalised relations.
State-owned EAPC said it signed a binding memorandum of understanding with MED-RED Land Bridge, a company with Israeli and Emirati owners, in Abu Dhabi on Monday during a ceremony with visiting U.S. Treasury Secretary Steve Mnuchin.
Along with UAE oil, the partners hope to use their “land bridge”, which saves time, fuel and costs versus crossing the Suez Canal, to transport oil back and forth between other countries. It could provide quicker access for consumers in Asia to oil produced in the Mediterranean and Black Sea regions.
“MED-RED is in advanced negotiations with major players in the West and in the East for long-term service agreements,” EAPC said.
It did not disclose financial details, but said the arrangement “is likely to increase the transferred quantities by tens of millions of tons per year.”
The UAE exports the vast majority of its crude oil to Asia.
A source familiar with the deal said that, if finalised, it could be worth $700-$800 million over several years and that supplies could start at the beginning of 2021.
EAPC, or Europe Asia Pipeline Co, operates its eponymous pipeline and deals in oil storage and the export and import of distillates.
MED-RED is owned by Petromal, a unit of Abu Dhabi-based National Holding, Israeli firm AF Entrepreneurship, and Lubber Line, an international group that focuses on infrastructure and energy.
“There is no doubt that this agreement is of high importance to the Israeli market, both economically and strategically, with joint investments extending a decade into the future,” said EAPC Chairman Erez Halfon.
Under the agreement EAPC will manage storing and transmitting the oil.
Editing by David Evans
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