Israel-UAE Oil Pipeline Deal in Question, but Budding Relations Unlikely to Sour

Environmentalists are worried about the toll on the delicate coral reefs found in the port of Eilat

The call by Israeli Energy Minister Karine Elharrar on Tuesday to cancel an oil pipeline agreement with a company from the United Arab Emirates has put the deal in question. But it is unlikely that relations between Israel and the UAE, normalized just over a year ago, will sour over this.

Criticized by environmentalists, the deal is meant to facilitate the transportation of Gulf oil from the Red Sea port of Eilat in Israel, moved across the country by pipeline to a Mediterranean port, and then sent to its final destination in Europe. Eilat is home to large coral reefs, which are considered one of the world’s most diverse concentrations. The presence of large oil tankers near the delicate underwater ecosystems could harm them severely.

Eilat’s economy is largely dependent on tourism, with the prized reefs serving as a major attraction.

“The agreement poses many risks to the Gulf of Eilat and its residents,” Elharrar said in an interview with Israel’s Army Radio. “It also has no benefit for the Israeli energy market.”

A coral reef in the Eilat Coral Beach Nature Reserve. (Wikimedia Commons)

Any environmental disaster in Eilat, as a result of human error or other circumstances, would also immediately affect Egypt and Jordan, which also abut the Gulf’s waters.

Eilat’s coral reefs have recovered from disasters in the past, both man-made and natural.

Israeli environmental groups have petitioned the country’s Supreme Court against the deal, claiming a large ecological risk. They now have the support of a key minister in the government – Israel’s Environment Protection Minister Tamar Zandberg, who already has voiced her opposition in the past.

The deal is one of the fruits of new relations Israel has recently forged with Gulf states in the wake of the signing of the Abraham Accords.

The oil pipeline deal was secret and signed in proximity to the normalization of relations between Israel and the UAE in September 2020. It was signed between the Europe-Asia Pipeline Company (EAPC), an Israeli government-owned corporation, and MED-RED Land Bridge, a company owned by both Israel and the UAE. The terms of the agreement have remained confidential.

“For decades, we have been aware of the horrific damages of the use of oil, gas and coal,” according to Professor Einat Aharonov, a geophysicist from the Institute of Earth Sciences at the Hebrew University in Jerusalem and an expert on fossil fuels. “Israel cannot afford to sign deals that encourage the use of oil, even if there are economic benefits,” she said.

“The environmental considerations are very clear, while the long-term potential of the agreement is not and raises a lot of questions,” said Michael Harari, Israel’s former ambassador to Cyprus and a policy follow at Mitvim – the Israeli Institute for Regional Foreign Policies.

EAPC has a problematic track record. It has been responsible for several massive pipeline spills throughout Israel’s history. One such spill almost destroyed Eilat’s coral reefs in the 1970s.

“EAPC has already demonstrated its problematic treatment of its plants and pipes,” said Aharonov. “Any transfer of oil is risky and the maintenance of the pipes in southern Israel is not up to par, with very old, rusty lines.”

The pipelines which currently transport oil within Israel to the Mediterranean and are maintained by EAPC are largely eroded, and at certain points the side-walls have almost completely disintegrated. This makes it a disaster waiting to happen, even before the new deal comes into effect, barring its annulment.

It is clear that the boycott against Israel is long-gone, but to see Arab oil in Israel is very significant on a declarative level.

For the Emirates, the agreement provides a shorter pathway for their oil to the West. But it is not the only alternative, making its cancellation perhaps less consequential. Egypt offers similar pathways. Also, according to data from The Observatory of Economic Complexity (OEC), most UAE gas exports go to Asia, making the West a less important market.

The normalization of relations between the two countries, as part of the larger Abraham Accords that established relations between Israel and four Arab and African states, saw the signing of many multi-million-dollar deals between Israeli and Emirati companies.

“Any deal between Israel and Arab states is important,” said Harari.

“It is clear that with the enthusiasm surrounding the Abraham Accords, energy will play a role because this is what the UAE has to offer to Israel,” said Dr. Elai Rettig, a lecturer in the department of Political Studies at Bar-Ilan University. “This agreement is mainly a financial one and does not really serve any important political interests for either side.”

Initially, the deal was lauded by its proponents as a large deal which fortifies the newly founded relations.

“Gradually, we have seen that there are other issues which sustain the relations, so that even if the agreement will be canceled, the UAE will remain present in Israel’s energy sector,” Rettig added, “Every deal and every connection that is made, further marginalizes the oil pipeline deal.”

In September of this year, Israel’s Delek Drilling finalized a deal selling a quarter of its stake in the East Mediterranean Tamar gas field to Abu Dhabi’s Mubadala Petroleum.

For Israel, energy agreements with Arab countries strike a chord recalling the national trauma of the 1973 oil crisis which came in the aftermath of the 1973 Yom Kippur War it fought with several Arab countries. There was a rush to secure an agreement immediately after the normalization as a symbol of the new ties. As the ties deepen and Israel is more secure in their stability, it could be time to let other considerations, such as important environmental ones, take precedence. The deal positions Israel as a means of transport for Emirati oil, not as a consumer of it.

“Geostrategically, Israel gets its oil from the post-Soviet region,” said Rettig. “It is clear that the boycott against Israel is long-gone, but to see Arab oil in Israel is very significant on a declarative level.”

The initial excitement derived from the new relations might have clouded the judgement of those involved. Voices against the deal which made valid arguments about its environmental ramifications were dampened by the hype of peace in the Middle East.

The relations will likely have to weather a cancellation or perhaps a scaling down of the deal. As a result of an internal Israeli debate, the UAE will not see its potential annulment as a political matter between the countries.

Israel must not risk its natural wonders. The whole process of transporting oil is risky. What could possibly be worth risking the rare corals or the drinking water in southern Israel.

“The cancellation will not affect the relations,” Elharrar assessed.

This will make room for the environmental considerations.

“Israel must not risk its natural wonders,” said Aharonov. “The whole process of transporting oil is risky. What could possibly be worth risking the rare corals or the drinking water in southern Israel,” she said.

“(With) the strengthening of the ties between the two countries and the potential of the relations, the cancellation of the deal will not cause damage,” said Harari, “The converging interests that brought the two together transcend any deal, regardless of how big it is.”

In the long term, energy cooperation between Israel and the Gulf states has the potential to change the region.

“The extent to which the Gulf can be connected to the east of the Mediterranean in the energy field and to create something even greater…,” said Harari, “This could significantly weaken Iran’s position in the Gulf and has not only economic benefits, but significant strategic and political meaning.”

Should the oil agreement be annulled, it appears that the relations could withstand the set back, and the environment will likely benefit.

“Scrapping the deal will not be a geopolitical disaster, and politics should not be taken into consideration in energy deals,” Rettig summarized. “The considerations should be environmental and financial.”