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Firm behind disputed UAE-Eilat oil pipeline: Ministries don’t have right to see deal

Europe Asia Pipeline Company, whose contentious oil deal with an Israel-UAE consortium has not been seen by any government ministry, tells Knesset committee it’s just following law

Sue Surkes is The Times of Israel's environment reporter.

An aerial view of the Eilat-Ashkelon Pipeline Company's (EAPC) oil terminal at Israel's southern Red Sea port city of Eilat, on February 9, 2021. (Menahem Kahana/AFP)
An aerial view of the Eilat-Ashkelon Pipeline Company's (EAPC) oil terminal at Israel's southern Red Sea port city of Eilat, on February 9, 2021. (Menahem Kahana/AFP)

The head of the state company that inked a contentious deal with an Israeli-United Arab Emirates business consortium to transport Gulf oil from the Red Sea to the Mediterranean defended the secrecy surrounding the deal on Monday, telling a Knesset committee that he had no legal obligation to share details of the agreement.

So far, no government ministry has seen the contract inked last year between the Europe Asia Pipeline Company and the Red Med consortium. This is despite concerns raised frequently by various ministries and environmental groups of the potential impact of a spill on the country’s environment, public health and tourism.

The agreement, which is currently being reviewed by the government, seeks to bring an unspecified increase in oil tankers to the EAPC’s Red Sea terminal in Eilat port, near to coral reefs of global importance because of their resilience to warming seas. The oil is then to be channeled overland through pipelines built in the 1960s to Ashkelon on the southern Mediterranean coast, where it is to be reloaded onto tankers bound for Europe.

On Monday, EAPC’s CEO, Itzik Levy, told the Knesset Internal Affairs and Environment Committee that government ministries never get to see agreements signed by government companies with foreign ones. The only approval required was from the EAPC’s board of directors, he said, which included the Finance Ministry’s Accountant General and representatives of the ministry’s Government Companies Authority.

Ariel Evelin, a senior deputy at the Government Companies Authority, further explained that the state could only intervene in the business of a state company in a handful of circumstances set out in the Government Companies Law. In this case, the authority did not believe that the government had a case to get involved, he said.

Evelin said that when the Red Med deal was inked, it did not contravene any government or environmental protection ministry policy at that time and that the EAPC was behaving exactly as a government company should.

Asked why the agreement was shrouded in such secrecy (imposed when EAPC’s predecessor was established to channel oil from the Shah’s Iran to Europe), Evelin said that both the EAPC and the Companies Authority thought the censorship should be lifted.

Itzik Levy, CEO of the Europe Asia Pipeline Company, attends a meeting of the Knesset Internal Affairs and Environment Committee on November 29, 2021. (Noam Moshkovitz, Knesset spokesperson’s office)

“Part of the disinformation (about the Red Med deal) comes from a fear that things are being hidden,” he said. “But this deal was not done in the dark. It was done in the proper way for a government company.”

Levy said he had informed the Energy and Environmental Protection Ministries about the agreement and had called on the latter to set up a joint committee to define what obligations the company would have to fulfill. Despite the Environmental Protection Ministry’s claims to the contrary, he asserted that the EAPC had “fulfilled them all.”

Since entering their posts with the new governing coalition in June, the ministers of Environmental Protection, Energy, Health and Tourism have all signaled opposition to the deal.

Enjoying a day out at the Coral Beach Nature Reserve in Eilat, southern Israel, September 9, 2021. (Chen Toufikian, Israel Nature and Parks Authority)

In May, three environmental organizations — Adam Teva V’Din, the Society for the Protection of Nature in Israel, and Zalul — petitioned the High Court, charging that a Memorandum of Understanding between the EAPC and Red Med was signed without any proper procedure taking place.

In September, the Environmental Protection Ministry restricted the number of tankers that can dock annually in Eilat to a maximum of six (the EAPC wants 30) and the quantity of oil that can be imported to two million tons per year. The ministry’s Marine Protection Unit said this was because the EAPC was continuing to disregard environmental concerns and had presented an inadequate risk survey for the second time.

EAPC’s chairman Erez Halfon argued to the committee that the Eilat port has “existential” importance for Israel and that canceling the Red Med deal would lead to the cancellation of all such deals and close the company down.

Contradicting a widely held belief that the Red Med oil would enter and exit the country without providing any benefit to Israeli citizens, he also revealed for the first time that more than 50% of the oil stored by the EAPC is bought by Israeli refineries.

Levy also pointed out that 75% of Israel’s crude oil comes in via the EAPC’s Eilat port, where the country’s emergency oil reserves are stored.

This aerial photograph, taken on February 10, 2021, shows the oil storage containers of the Eilat Ashkelon Pipeline Company (EAPC) in the mountains near Israel’s Red Sea port city of Eilat. (MENAHEM KAHANA/AFP)

However, Nahum Yehoshua, Chief Economist at the Energy Ministry’s oil administration, responded that while the Eilat port was indeed important for Israel’s fuel economy, the Red Med deal was not necessary for the country’s energy security.

The committee meeting also debated the EAPC’s environmental record.

Both Halfon and Levy claimed that there has not been a single leak or mishap by the EAPC at the Eilat port over the last 40 years.

To this, committee chairman  Yorai Lahav-Hertzano (Yesh Atid) responded that he knew of eight EAPC pollution events in Eilat between 1990 and 1993 and another one in 2008.

The Red Med deal is opposed by the Israel Nature and Parks Authority, a forum of some 20 environmental organizations, scores of scientists and the mayors of Eilat and Ashkelon.  Environmental activists are staging weekly demonstrations against the accord nationwide.

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