The state Department today warmly welcomed Egypt’s award of a $345.4 million contract for construction of the proposed Suez-Mediterranean oil pipeline to an American construction and financial consortium. The Bechtel Corp., a California-based construction company, will build the twin 42-inch pipelines paralleling the Suez Canal for 210 miles. Kidder Peabody and Co., Inc., a New York investment bank, and the First National City Bank of New York will finance the venture.
“We are pleased Bechtel has been awarded the contract,” a State Department official told the Jewish Telegraphic Agency. “We regard this development as a positive one.” Whether the U.S. Export-Import Bank, which frequently funds projects abroad, will be involved in the financing and whether the U.S. government will insure the consortium’s outlay under its investment guarantee program remained unclear.
The Department official said the matter of financing has been raised with the Ex-Im Bank, but inasmuch as financial arrangements are still being worked out by the consortium, specifically Kidder Peabody, “we are not in a position to comment or predict what the final financing package will be.”
MAJOR SIGNIFICANCE FOR MIDEAST
In giving the contract to the American group, the Egyptian government turned aside a French-led European consortium of 16 companies that signed a contraction 1971 to build and finance the project which would help overcome oil movement problems created by the continued shutdown of the Suez Canal.
The American offer was $15.5 million lower than the final European bid, Egyptian officials were reported to have said in emphasizing that the Cairo government had made a pragmatic business decision devoid of political considerations. But other Cairo sources indicated that the move has major political and economic significance for both the United States and Egypt and the Middle East as a whole.
This is the first major American economic involvement in Egypt in 17 years or since financial aid for the Aswan Dam construction was withdrawn by the U.S. government in 1956 when John Foster Dulles was Secretary of State. Construction of the pipeline’s first stage is expected to begin in Jan. 1974 and finished in two years. Six months afterwards the second stage is scheduled to be finished.
The Archive of the Jewish Telegraphic Agency includes articles published from 1923 to 2008. Archive stories reflect the journalistic standards and practices of the time they were published.
