Israel Offers Arab Oil a Transit Point in Gaza
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Israel Offers Arab Oil a Transit Point in Gaza

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In a peaceful bid to foster economic cooperation with the Arab world, Israel is offering transit facilities for European-bound Arab oil at a projected terminal in Gaza.

Under an Israeli plan submitted to a team of World Bank experts, Saudi Arabia and Kuwait would pump oil overland to the Mediterranean port of Gaza, where it would then be shipped to European destinations.

Such an arrangement would save the two nations an estimated $240 million annually by enabling them to bypass more expensive transit through the Suez Canal or around Africa.

The plan would also help boost employment in economically depressed Gaza, a center of anti-Israel intifada turbulence.

The blueprint is to be reviewed by the World Bank panel in the context of the multilateral talks on economic development that are part of the Middle East peace process.

The proposal is based on a study by Professor Gideon Fishelson, scientific coordinator of Tel Aviv University’s Armand Hammer Fund for Economic Cooperation in the Middle East.

Fishelson, a professor of economics, reckons it costs $18 to ship one ton of oil from the Persian Gulf to Western Europe through the Suez Canal; the cost rises to $20 in shipment by supertankers around Africa.

Savings of $3 to $6 per ton of crude oil could be achieved by piping the oil from the Arabian Peninsula to the Mediterranean coast and then loading it on tankers bound for Europe, he said.


The Middle East supplies the world with some 600 million tons of oil a year, says Fishelson. Hence the suggestion that about 60 million to 70 million tons will be exported via Gaza “is reasonable,” he said.

Potential savings would more than cover the cost of constructing and maintaining the pipelines and an oil terminal in Gaza, and still leave a surplus, he said.

At the political level, the plan would have no impact on Arab national pride since “Arab oil would continue to be exported via an Arab oil terminal.”

Moreover, the pipelines would physically link Israel and three or four Arab countries, “making them interdependent” and thus cementing the peace.

The Israeli economist recommended that Israel shut down its oil terminal at the southern port of Eilat. Originally built to pipe Iranian oil to refineries in Ashdod and Haifa, it now funnels oil imports from Egypt.

But Fishelson said the terminal poses “a major environmental” hazard.

“The delicate environmental balance in the Gulf of Eilat and the uniqueness of its aquatic life are sufficient arguments for not taking any additional risks,” he wrote in the study.

He suggested that Israel buy its oil instead from supplies pumped through the proposed overland pipeline, which could be linked to an existing Eilat-Ashdod system in the desert north of Eilat. The danger of an oil spill in a “closed oil-transfer system” would be minimal, he said.

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