Israel to Ramp Up Red Sea Oil Imports Despite Environmental Risks

• Israel aims to significantly increase oil tanker dockings at its Red Sea port of Eilat to enhance energy security amidst regional conflicts.
• The move faces substantial environmental concerns due to potential risks to delicate coral reefs and ecosystems.
• Israel conducts nearly all of its trade via sea, importing approximately 267,000 barrels of crude oil per day from various sources.

Israel is set to significantly increase the number of oil tankers docking at its Red Sea port of Eilat, driven by the need to bolster energy security amid escalating regional conflicts. This move, however, has sparked substantial environmental concerns due to the potential risks to the delicate coral reefs and surrounding ecosystems.

Prime Minister Benjamin Netanyahu's office has pushed for the relaxation of current restrictions on oil unloading at Eilat, a critical junction between the Red Sea and the Mediterranean. These restrictions were initially imposed by the Environmental Protection Ministry in 2021, which effectively halted an ambitious oil supply agreement with the United Arab Emirates (UAE). These curbs were temporarily eased due to the war with Gaza, and now there are plans for a more permanent increase in capacity.

The state-owned Europe Asia Pipeline Co. (EAPC), which operates a strategic pipeline linking the Red Sea to the Mediterranean, seeks to increase the volume of oil transported through Eilat. This pipeline offers an alternative route to the Suez Canal for oil shipments destined for Europe. Despite the strategic importance, the plan faces staunch opposition from environmental regulators and local authorities.

Strategic Necessity Amid Conflict

Israel's decision comes at a time of heightened security concerns, with ongoing conflicts involving Hamas in Gaza, Hezbollah in Lebanon, and threats from Iranian proxies in Yemen and Iraq. These multifaceted threats underscore the urgency for Israel to secure a reliable energy supply to sustain its economy and support military operations.

The recent brief shutdown of Israel's Tamar gas field, a critical energy source, during the onset of conflict with Hamas, highlighted the vulnerability of the nation's energy infrastructure. Additionally, disruptions by Yemeni Houthis in the Red Sea have forced shipping routes to be redirected to Mediterranean ports, complicating logistics and increasing costs.

EAPC's Expansion Ambitions

EAPC's 2020 agreement aimed to transport substantial volumes of UAE oil to Europe via Israel. This deal, following the normalization of relations under the Abraham Accords, anticipated the docking of about 50 oil tankers annually at Eilat, a significant increase from the previous average of two tankers per year. However, the Environmental Protection Ministry's stringent "no additional risk" policy limited this volume to two million tons, stalling the agreement.

The coral reef near Eilat, noted for its resilience to climate change, is highly sensitive to oil spills, making even minor incidents potentially catastrophic. Despite this, a recent report from Netanyahu's office advocates for expanding the volume of oil imported through Eilat, emphasizing the need for flexibility in energy policy amidst security threats.

Regulatory and Environmental Challenges

The Israeli government has directed the Environmental Protection Ministry to develop a plan to manage the risks associated with increased oil deliveries. However, the ministry has voiced strong objections, claiming that its concerns were overlooked and that it lacks the resources to effectively oversee the proposed increases.

Past incidents, such as the 2014 pipeline burst that resulted in a major oil spill in a nature reserve, underscore the environmental risks involved. The Environmental Protection Ministry remains opposed to increasing oil deliveries at Eilat, citing the potential for similar disasters.

Economic and Diplomatic Dimensions

The UAE oil deal holds substantial economic promise, potentially generating around $50 million annually for EAPC. Yet, uncertainties remain about the deal's viability, even if the limitations at Eilat are lifted. Petromal, a unit of Abu Dhabi-based National Holding, a key stakeholder in the deal, has not provided any comments on the current situation.

EAPC Chairman Erez Halfon has welcomed the government's support, emphasizing the strategic importance of EAPC's Eilat facility, particularly in the context of the ongoing conflicts. He warned that without consistent oil deliveries, the facility's reliability and operational readiness could be compromised.

Israel conducts nearly all of its trade via sea, primarily through Mediterranean ports. In 2023, the country imported approximately 267,000 barrels per day of crude oil, predominantly from Kazakhstan, Azerbaijan, and Kurdistan.

Future Prospects and Implications

The Israeli government has tasked the Environmental Protection Ministry with conducting a comprehensive survey and presenting a risk management plan within three months. This directive has ignited debates within the government, reflecting the tension between immediate economic and strategic needs and long-term environmental sustainability.

As Israel navigates its complex security landscape and seeks to ensure energy stability, the decision to increase oil tanker dockings at Eilat highlights the broader challenge of balancing economic imperatives with environmental preservation.

In the coming months, the outcome of this policy shift will be closely watched by industry stakeholders, environmental groups, and international partners, as it could set a precedent for how nations manage the competing demands of energy security and environmental protection.

By Julianne Geiger for Oilprice.com

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