Race Across the Sand

Even before last year's Arab-Israeli war, the Suez Canal was fast diminishing in importance. Oil tankers, which accounted for almost half of all Suez traffic, were getting too big for it. As a result, more and more Middle Eastern oil was being shipped in giant tankers around the Cape of Good Hope. Faced with the prospect of dwindling profits from the waterway, Egypt began giving thought to building an overland pipeline as an alternate route for transmitting oil to the Mediterranean Sea. Then, when Israel came up with the same idea following the Six-Day War--and with the canal closed indefinitely--the race was on. Last week, getting the jump on the Egyptians, Israel started construction of a $113 million pipeline project linking the port of Elath on the Gulf of Aqaba to Ashkelon on the Mediterranean. Bulldozers at both ends of the planned, 160-mile line began clearing sand dunes to make way for oil-storage tanks. The 42-in pipeline, which is being built by Israeli, U.S. and French technicians, should be able to transmit 15 million tons of crude per year upon its completion in August 1969. With the addition of more pumping stations its annual capacity could be increased 60 million tons by 1975.

Egypt meanwhile, hopes to start work on a 42-in. line of its own late next year with completion scheduled for the end of 1970--a full year after Israel's line is due to go into operation. Under plans drawn up by a British engineering firm, the $150 million line would carry 50 million tons per year from the Gulf of Suez to one of three terminals--Alexandria, Damietta and Port Said. Despite the greater distance involved, the Egyptians will most likely decide on the 190-mile Alexandria route on the theory that it would be more secure from possible Israeli attack.

Counting on the Neighbors. In addition to its pipeline project, Egypt had originally intended to widen and deepen the Suez Canal--which could previously accommodate fully laden tankers no bigger than 70,000 tons--to handle those in the 200,000-ton range. But many of the new supertankers are 250, 000 tons or more. Moreover, if and when the canal opens, the oil producers would probably find it cheaper to pipe oil to the Mediterranean than to sail through Suez and pay its heavy tolls. Using a pipeline would result in even more savings compared with the cost of long hauls around the Cape; Persian Gulf oil would simply be unloaded from supertankers at one end of the line, then put into smaller ships at the other end for conveyance to Europe.

Once their pipelines are completed, Egypt and Israel will find themselves ri vals for the same trade. Cairo is obviously counting on its Arab neighbors, which currently produce 75% of the Middle East's oil annually, to keep its line bubbling. The region's only major non-Arab producer is Iran, on which Israel relies for much of its domestic oil needs. But predominantly Moslem Iran is sure to come under heavy Arab pressure to steer its oil-cargo trade in Cairo's direction. So, even though its pipeline is expected to be finished first, Israel may thus run into trouble in the race for customers.

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