Maj. Gen. (res.), Oren Shachor, Chairman and President, Eilat-Ashkelon Pipeline Company



I wish to discuss two issues which are extremely important to our energy discussion today.

Mobilization of crude oil – there is an option to pose Israel as a central provider of crude oil, from the Mediterranean to the Far East. Another interesting possibility is to post Israel as a provider and transporter of natural gas. This is a very interesting and at the same time problematic issue. In may respects it’s correlated to our national security; without fuel cars will not drive, and without gas in the long run there won’t be any electricity in the country.

I want to say a few words regarding Eilat- Ashkelon Pipeline Co. (EAPC), which not all of you know, and for some extant we are trying to maintain discrete for many different reasons. EAPC crosses Israel from north to south with sets of complex pipelines.

There are two oil plants, one next to Ashkelon and another next to Eilat, in addition to one drawing station. Israel’s relations with Iran, during the late 60’s, created a strategic bridge of sophisticated pipelines between the Mediterranean and the Red Sea.

My main issue today, is that of reverse flow, and its usage. We have a 42” diameter pipeline, which connects Ashkelon (Mediterranean) and Eilat (The Red-Sea), and holds the capacity to transmit large amounts of crude oil, both South and North.

From the Mediterranean to the North the pipeline capacity is 40 million tons, and the reverse flow capacity is 20 million tons (one ton equals 7.3 barrels of oil) it is possible to double and even triple this capacity.

In addition, we hold an oil resource in the Mediterranean of over a million tons, and we have similar containers in the Eilat bay. Meaning we have full capacity, thanks to reverse flow capabilities.

Our newest development is the Baku-Tibilisi-Ceyhan Pipeline (BTC), which transforms crude oil from Baku at the Caspian Sea all the way to Turkish Ceyhan via Georgia. This 42’ diameter and 1600 Kilometers length pipeline is owned by a cooperation headed by British Petroleum.

This pipeline solves problems that we had been facing in the past. In the past we had to transfer crude oil from the Black sea to the Mediterranean by ships, due to many regulations in this area the transmission was extremely complex. In the past we had no alternatives, today we have this pipeline, which is capable of direct transmission and we are currently adding another pipeline. As an outcome we have added 50 million tons to the 200 million we have transferred to the Mediterranean.

We are facing a new era, in which the Mediterranean is becoming a gate for crude oil from former USSR states. This oil still fails to compete with oil from the Parisian Gulf, due to rates gap which benefits Dubai. This is about to change, we have invested in new markets in India, China, South Korea, and other places with a high growth rate. These developing states, search for diversity in energy resources.

Our pipelines systems, in addition to ships which can transfer crude oil from Turkey to Ashkelon, in addition to our storage capacity, provide us with greater flexibility. This enables us to become a strategic bridge, which is capable of transferring large amounts of oils from the Caspian Sea to the Far East.

In addition we are considering the possibility to place a pipeline between us and Turkey; this will make the process more efficient. We are not dealing with unfounded ideas, but rather actual plans. This also relates to the issue of privatization of production sites, which will encourage competition and will benefit the State greatly.

Natural gas is being used by a cooperation which establishes a plant of 820 megawatts (more productive than Riding power plant); this plant will be capable of providing 8% of Israel’s consumption. I believe this plant will succeed competing with the national electricity company, and as an outcome we may be facing a real privatization which will create competition; in contrast to one company which controls the entire domestic market. In that respect we have made a real progress.

I am happy to announce we have singed an agreement with the Egyptian EMG Co. which produces natural gas, in very large quantities. We will receive natural gas in the upcoming months at very attractive prices, which will enable us to compete with the electricity company, and benefit the consumers with competitive prices.

Gas prices will drop as competition rises. When we compare prices to Europe or to the US, we are dealing with liquification of petroleum, which is more expensive than natural gas.

Natural gas will be imported from Egypt, and in that respect we have a solution for gas shortage. My view is that we need more competition, and we need more sources of gas. We cannot rely fully on the Egyptian gas. Once we will have both competition and alternative sources, we should be able to transfer larger quantities of gas.

I wish to add that the energy market in Israel needs liquifications. This will enable us a level of domestic production and will limit the negative affect of our unstable market and limited sources of energy. In addition it will enable gas tanks to get here. It will also provide Israel with reserves in a case of a gas shortage. This is a very expensive project (one million dollars); EAPC is interested in this project, but cannot finance it alone. The State should take part in this project, it is a very long process, and without a secure source of gas, we are not in a good position.

I wish to add a finishing sentence regarding alternative sources for gas. We invest a lot into it, mainly in terms of gaining the necessary knowledge. As a state we should address this market much faster. We barely have solar cars, or cars using alternative sources of energy. We need to invest more in the energy market, and to encourage private investors to address this market.

I wish to conclude by emphasizing the importance of liquidation, and encouraging the government to address this.     




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