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UAE says nixing pipeline agreement won’t damage ties with Israel

Contradicting company’s claim, senior official says deal to ship Gulf crude to Europe overland via Israel — opposed by environmentalists — has nothing to do with Emirati government

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

Israelis at a Red Sea beach close to the Europe Asia Pipeline Company's oil terminal in Eilat, southern Israel, February 10, 2021. (Menaham Kahana/AFP)
Israelis at a Red Sea beach close to the Europe Asia Pipeline Company's oil terminal in Eilat, southern Israel, February 10, 2021. (Menaham Kahana/AFP)

The United Arab Emirates has moved to distance itself from a controversial plan to channel oil from the Gulf to Europe via an overland pipeline through Israel, with an official saying Thursday that the government is not a party to the agreement and denying a claim by one of the companies involved that its cancelation would negatively impact burgeoning bilateral ties.

The deal, which was agreed to in the heady days following the UAE’s decision to normalize ties with Israel last year, has been touted as one of the more immediately lucrative products of the Abraham Accords. But it has also faced domestic opposition in Israel over environmental concerns, and in July the government delayed implementation of the deal despite claims that doing so could hurt ties.

In July, an Israeli company involved in the deal, the Europe Asia Pipeline Company, told the High Court that canceling the deal could lead to “significant damage to the foreign relations of the State of Israel,” in response to a petition filed by green groups to declare the agreement invalid.

But according to a senior official at the UAE’s embassy in Israel, the pipeline deal has no bearing on the relationship between Jerusalem and Abu Dhabi.

“We have clarified to the Israeli government that this is not a government project. There’s very close communication at the highest level,” the official told the Times of Israel on Thursday, speaking on condition of anonymity. “Israel is aware that this is not a UAE government project but rather a private commercial deal.”

The official also stressed that while a commercial memorandum of understanding (MoU) was signed during state-sponsored events to celebrate the normalization between Israel and the UAE in August, including high-level delegations from Israel and the US visiting Abu Dhabi, the deal itself had nothing to do with the US-brokered accords.

The comments reflect Emirati unease with recent publicity surrounding the pipeline deal. Aiming to build trust with the Jewish state and to advance joint projects in sustainable technology rather than fossil fuels, Abu Dhabi is keen to dispel any suggestion of official involvement with the EAPC.

The deal is between the Europe Asia Pipeline Company (EAPC), a secretive company set up between Israel and Iran before the 1979 Islamic Revolution and then nationalized by Jerusalem; MED-RED Land Bridge, jointly owned by Petromal, part of the private, Abu Dhabi-based conglomerate National Holding; and the Israeli companies AF Entrepreneurship, owned by Yona Fogel and Malachi Alper, and Lubber Line, owned by Yariv Elbaz.

Hisham Abd Ahmid Ahmid, Vice Chairman National Holding and Itzik Levy, EAPC CEO sign a pipeline agreement on October 20, 2020. Former US Treasury Secretary Steve Mnuchin is standing third from the left.(Courtesy: EAPC)

Under the terms of the deal, the partners would significantly increase the amount of crude oil shipped from the Gulf to the EAPC’s Red Sea port in Eilat, where it would be pumped overland to an EAPC terminal in Ashkelon. From there, the crude would be transported via the Mediterranean for sale in Europe. Oil could also be sent from Europe into Asia via the overland pipeline.

The aging pipeline is already used as a conduit for Gulf crude, though details of its operations are generally kept sealed under Israeli regulations formulated to protect the secretive initial deal with pre-revolution Iran.

It remains unclear which, if any, government ministries have seen the MoU documents that were signed. Even the Finance Ministry, which is tasked with overseeing EAPC operations, responded to a freedom of information request to see the contents of the MoU by saying it did not have access to them.

The UAE official said that Abu Dhabi supported Israel’s right “to do what is best for Israel.”

Israel’s top diplomat in Dubai, Ilan Sztulman Starosta, said in September that “it won’t affect the relationship” with the UAE if the flagship Gulf oil deal flounders.

The UAE government itself is unlikely to use the EAPC pipeline, given that its contractual commitments to supply oil are with the Far East.

The plan is opposed by the Israel Nature and Parks Authority, a forum of some 20 environmental organizations and scores of scientists and Eilat residents, who accuse the EAPC of having a poor environmental record, including numerous oil leaks. The EAPC, formerly called the Eilat-Ashkelon Pipeline Company, was responsible for the largest environmental disaster in Israel’s history six years ago, and many fear a new leak could decimate the Red Sea’s prized coral reefs near Eilat and damage tourism, regarded as the city’s economic lifeblood.

Police intervene in an Extinction Rebellion protest against the Europe Asia Pipeline Company’s deal with an Israeli-United Arab Emirates consortium to channel Gulf crude through Israel, from the Red Sea to the Mediterranean Sea, Ashkelon, October 17, 2021. (Screenshot)

The comments from the official came days before world leaders will gather in Scotland for a major climate summit, with global attention turned to staving off the unfolding climate disaster. Despite its traditional reliance on oil, Abu Dhabi has looked to diversify its economy and move away from fossil fuels.

“The UAE is looking to invest heavily in renewable energy and to move quickly and intelligently to a world after oil,” the official said. “And in energy, renewables and developing next-generation clean fuels, are items of interest in the state’s relationship with Israel.”

The UAE is the first Gulf nation to set a target of net-zero carbon emissions by 2050. Prime Minister Mohammed bin Rashid Al Maktoum has said that the country will invest almost $165 billion in clean energy by 2050.

Abu Dhabi plans to be producing nearly 55 percent of its electricity from renewable sources in five years and is bidding to host the next major UN climate change conference in 2023.

Last month, the Environmental Protection Ministry limited the number of Gulf tankers that can dock annually in Eilat to a maximum of six, well below the 30 ships a year sought by the EAPC. The ministry said the decision was due to deficiencies in a second environmental risk survey provided by the company, as well as a lack of adequate preparation for possible oil spills.

An oil tanker docks at the Europe Asia Pipeline Company port in Eilat in southern Israel, on May 4, 2021. (Shmulik Taggar)

Commenting Thursday on the UAE official’s remarks, the EAPC insisted that canceling the deal with the UAE would cause “significant harm” to Israel and to its citizens.

“Implementation of the agreement ensures the security and energy independence of the State of Israel, breaks the Arab oil boycott for the first time, increases the immediate supply of crude oil and thus reduces the fuel costs paid by Israeli citizens,” the company said.

“Although oil is a ‘transition fuel,’ it is likely to be with us for the next two decades as well, and in the process of transition to renewable energies, it is important to maintain energy security and reliability and continuity of supply, so as to avoid an energy crisis similar to the one happening in Europe.”

Asked how the deal was related to Israel’s citizens and its energy security, an EAPC spokesman told the Times of Israel that some of the oil shipped into Eilat or Ashkelon and stored there is sometimes sold to the oil refineries in the northern city of Haifa rather than transported elsewhere if a good profit could be made.

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