Western Consortium to Build $236 Million Oil Pipelines for Egypt

A consortium made up largely of Western governments and private oil companies led by French interests, will build two petroleum pipelines for the Egyptian government from the Red Sea near Suez to the Mediterranean near Alexandria, the Jewish Telegraphic Agency was informed today. A contract for the project will be signed in Cairo tomorrow. American officials here said the project will be completed in 18 months at an overall cost of $236 million. Egypt will operate the pipelines which will carry approximately 80 million tons of oil annually, and eventually be increased to 120 million tons. The JTA was informed that to start with. Egypt will derive an income of $120-$180 million per annum.

Sources here would not speculate on the effects the new pipelines might have on the flow through the existing pipelines running through Syria and Lebanon and the new Israeli pipeline from Eilat to Ashkelon. They also refused to speculate as to whether the project was initiated on the supposition that the Suez Canal will remain closed to shipping for some time to come. President Anwar Sadat, of Egypt, announced at the Arab Socialist Union party congress last weekend that the contract would be signed but gave no details. The new lines will run from a point south of Port Suez, will cross the Nile 30 miles south of Cairo and continue northwest to a point near Alexandria. France owns the lion’s share of the consortium, sources here said. The French government is guaranteeing some of the loans and French banks are involved. The Italian government is also helping to back the capitalization. The only U.S. involvement, the sources said, is an American oil company, Amoco, which is operating in Egypt south of Suez and has a “minor share” in the project. British, Spanish and Italian oil companies are also participating and Japanese, West German and American companies were reported to be interested in providing construction materials and equipment. A feasibility study for the lines was conducted by a British firm, Imag. The consortium itself, known by the acronym. Socia, is said to be largely French and headed by French personnel.