Israeli Plans for Oil Pipeline from Aqaba to Haifa Reported in Final Stages

Plans for a government-sponsored pipeline project to carry oil from the Gulf of Aqaba, Israel’s Red Sea outlet, to the refineries at Haifa are in the final stages, it was learned today on reliable authority.

The government’s decision to go ahead on the largest project yet undertaken by the young state is the result of Iraq’s persistent refusal to allow crude oil to flow through the existing pipeline from the Kirkuk fields to Haifa and Egypt’s avowed intention to prevent the use of the Suez Canal to tankers carrying crude oil to the Haifa refineries. The pipeline would bypass the Suez Canal and obviate dependence of the refineries on Iraq oil.

Stoppage of Iraq oil 15 months ago and the subsequent closing down of the Haifa refineries has forced Israel to buy abroad the half-million tons yearly which it needs. These purchases have been made at exorbitant prices and in hard currency. This process has been going on at a time when Middle East oil prices have come down 15 percent.

The high cost being paid for fuel oil is one of the most serious drains on Israel’s limited economy and one of the important drags in the country’s economic development. Similarly, the enforced idleness of the refineries, which have a capacity of 4,000,000 tons a year, represents a serious economic loss for the state.

One month ago, the government proposed the project to the British-owned Consolidated Refineries and suggested that the company build and operate the pipeline. The Israeli Government was prepared to provide the dollars necessary for the purchase of pipes in the United States. The government also proposed giving the company the right to sell the pipeline after the first ten years, but reserving for the government priority on purchase in that event. The Consolidated Refineries, which are jointly owned by the Anglo-Iranian Company and the Anglo-Saxon Petroleum Company, rejected the proposal.