Israel and Russia Challenge OPEC

(Beirut Daily Star) Ed Blanche - A 250-kilometer pipeline running from Ashkelon on the Mediterranean to Eilat on the Gulf of Aqaba has become a vital artery for Russian oil exports to the Far East, the fastest-growing energy market in the world. By sidestepping the Suez Canal, the Trans-Israel Pipeline, known as the Tipline, opens up a shorter and cheaper route for Russian oil exports to Asia and thereby threatens Arab exports from the Gulf. According to British energy analyst Simon Henderson, this "has the potential to greatly impact the international oil market. Russian oil exports are unconstrained by the quotas of the Organization of Petroleum Exporting Countries, and a steady stream of expanded Russian shipments via the Tipline could...lower prices worldwide." The new route puts Israel firmly on the oil industry map. It also strengthens Russia's position in the global energy market, challenging Saudi Arabia's as the pre-eminent oil producer. Russia has little interest in aiding Saudi-dominated OPEC, and is expected to push up production this year. The Tipline has the capacity to handle 55 million tons of oil a year. Moscow is expected to pump 20-30 million tons through Israel this year, as well as provide most of Israel's requirements that formerly came from Egypt and the North Sea. Russian oil shipped through Israel is made more attractive because it eliminates the so-called "Asian premium," the extra $1 per barrel arbitrarily imposed on Asian consumers by Gulf producers. The writer, a member of the International Institute for Strategic Studies in London, is a Beirut-based journalist.

2004-02-18 00:00:00

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