Egypt, 8 West European Nations Sign Accord on Suez Gulf-mediterranean Oil Pipeline

Egypt signed an agreement yesterday in Cairo with an eight-nation Western European consortium to construct a 209-mile long pipeline system linking the Gulf of Suez to the Mediterranean. Work on the two and a half year project will begin with three months. Cost of the dual 42-inch pipeline system is estimated at $280 million. The pipelines will be able to handle 80 million tons annually their first year of operation, after which booster pumping stations in Cairo will increase the lines’ capacity to 120 million tons a year. Thus the pipeline will be the largest in the Middle East. It will cut 14,500 miles off the present traker route from the Suez Gulf round the Cape of Good Hope to European markets. The countries contributing money to the project are France ($44 million), West Germany ($44 million), Italy ($40 million), Britain ($29 million), Spain ($20 million), Holland, Belgium, and Greece ($10 million each).

Also, the Saudi Arabia monetary agency has granted Egypt an unconditional guarantee for $20 million and Kuwait will provide $5 million. American interests are represented by Mobil and Amoco, a subsidiary of Standard Oil of Indiana operating in Egypt, each contributing $7.5 million. The Egyptians plan to repay the debt over eight years from completion of the pipelines. Experts declined to predict the effect the new lines will have on existing facilities in view of the circumstances which might prevail at the time of their completion. One specialist on the area noted that the loading terminal at the Suez point is within Israeli artillery range but the lines move farther away as they go northward to the Mediterranean. Israel has a 42-inch pipeline from Eilat to Ashkelon which can handle 22 million tons a year for trans-shipment to the Mediterranean. Plans have been announced to increase that line’s capacity to 45 million tons.