Oct 21, 2020

Israel and UAE companies sign MoU for energy collaboration

Israel
UAE
pipelines
Scott Birch
3 min
Tie-up offers oil producers and refiners cost-effective oil transportation east and west
Tie-up offers oil producers and refiners cost-effective oil transportation east and west...

Israeli state-owned company Europe Asia Pipeline Company (EAPC) and MED-RED Land Bridge (MRLB), a joint venture between Petromal – an integrated oil and gas company based in Abu Dhabi – and other Israeli companies, have signed a binding MoU for energy collaboration.

The agreement covers storing and transferring oil and oil products through the EAPC pipeline network and storage tanks, from the UAE and other Eastern markets to the West, and from the Mediterranean to the Far East.

The signing ceremony in Abu Dhabi concluded several weeks of negotiations among the parties to create one of the first public-private-partnerships between an Israeli state owned company and a JV with a UAE-based company since the signing of the Abraham accords in August.

Hisham Abd Ahmid Ahmid, Chairman of Petromal, said: “We are pleased that Petromal is part of this public-private-partnership, the first of its kind since signing the historic agreement between the UAE and Israel. We look forward to working closely with our new partners to execute this venture and add value to the global energy security. This opportunity would not have been possible had it not been for the signing of the Abraham Accord, and we continue to look for more areas of collaborations to generate more value for both UAE and Israel economies."

The collaboration is significant for the global energy market, since it offers oil producers and refiners the shortest, most efficient, and cost-effective route to transport oil and oil products from the Arabian Gulf to Western markets. Moreover, it provides access for Asian consumers to oil produced in the Mediterranean and Black Sea regions. 

MRLB is a joint venture between Petromal, an integrated oil and gas company based in Abu Dhabi, and Lubber Line, an international company owned by Yariv Elbaz, which specializes in investment in international projects in the infrastructure and energy sectors; and AF Entrepreneurship, an Israeli company owned by Yona Fogel and Malachi Alper, two of Israel’s most seasoned business executives, which develops and operates projects and ventures in the energy sector. MRLB is in advanced negotiations with major players in the West and in the East for long-term service agreements, the statement adds.

As per the MOU, EAPC will provide management services of the infrastructure, enabling transmission, and storage of the oil and oil products.

“This is a historic agreement, which further broadens EAPC’s international collaborations. There is no doubt that this agreement is of high importance to the Israeli market, both economically and strategically, with joint investments extending a decade into the future. I am thrilled about this collaboration with our friends from the UAE, our neighbours in the Middle East. This commercial agreement has clear geopolitical significance,” says Erez Halfon, EAPC chairman.

The geopolitical changes in the Middle East as witnessed by the Abraham Accords recently signed between Israel and the UAE, spearheaded by the Trump administration, have provided an opportunity for mutual endeavours in diverse areas, including the energy sector. 

"The MOU is a historic milestone which will strengthen the Israeli economy, ensure energy security for the countries in the region, and propel EAPC and the Israeli economy forward," concludes Itzik Levy, EAPC CEO.

Share article

Jun 21, 2021

Magellan, Enterprise and ICE unveil new futures contract

futures
Oil
trading
USA
Dominic Ellis
4 min
The Midland WTI American Gulf Coast contract is being launched in response to market interest for a Houston-based index

Magellan Midstream Partners, Enterprise Products Partners and Intercontinental Exchange (ICE) are establishing a new futures contract for the physical delivery of crude oil in the Houston area.

The Midland WTI American Gulf Coast contract is being launched in response to market interest for a Houston-based index with greater scale, flow assurance and price transparency. It will use the capabilities and global reach of ICE’s trading platform and is due to be launched by ICE by early 2022, subject to regulatory approval. 

The quality specifications of the new futures contract will be consistent with a West Texas Intermediate crude oil originating from the Permian Basin with common delivery options at either the Magellan East Houston terminal or the Enterprise Crude Houston terminal. In support of this new futures contract, Magellan and Enterprise anticipate discontinuing their existing provisions for delivery services under the current futures contracts deliverable at each terminal once the new contract receives regulatory approval and is finalised. 

“Magellan is pleased to join forces with Enterprise and ICE to offer this leading-edge joint futures contract,” said Aaron Milford, Magellan’s chief operating officer. “The new contract improves the transparency, flexibility and marketability of Midland WTI crude oil for Gulf Coast and export customers while maintaining industry-recognized quality and consistency.”

Harold Hamm, Chairman of the Board of Continental Resources and Founding Member of the American Gulf Coast Select Best Practices Task Force Association said on April 20 last year, when the Cushing, Oklahoma WTI contract traded down to -$38, it was a wake-up call to the oil industry that the storage constraints and landlocked location of the Cushing contract could no longer be ignored.

"I started the American Gulf Coast Select Best Practices Task Force to develop specifications for a new US light sweet crude oil price benchmark in the American Gulf Coast, and to advocate for its implementation and adoption as the main pricing point for the US oil markets," he said.

"We think a futures contract in the most interconnected market center in the country, with a widely accepted quality spec, which settles with guaranteed delivery of crude oil is an important new alternative for the industry. The task force has worked tirelessly to create a marker with transparency and liquidity that is waterborne for this modern era. The Midland WTI American Gulf Coast futures contract ... is a huge step forward for the industry and goes a long way to accomplishing the mission on which the task force has been working.”

Brent Secrest, Executive Vice President and Chief Commercial Officer of Enterprise’s general partner, said: “We are excited about this new crude oil futures contract, which features the combined strength of two extensive and complementary networks of midstream assets with a world-class trading platform to provide customers with greater supply reliability, flexibility and price transparency. 

As the market hub for Permian Basin production, Houston represents the most logical choice for a new futures contract. Between Magellan and Enterprise, we offer access to virtually all of the export capacity in the Houston region, redundant connectivity to all area refineries, a robust Gulf Coast storage position and interconnects to all of the relevant supply pipelines, including those owned by third parties.”

Jeff Barbuto, Global Head of Oil Markets at ICE, said combining efforts with Magellan and Enterprise to establish a benchmark for pricing Midland quality WTI on the Gulf Coast allows it to offer the industry a futures contract with over four million bpd of supply capacity from Midland into Houston, access to both domestic and foreign demand, and nearly 60 million barrels of storage capacity in the Magellan and Enterprise systems. 

"Traded on the same global platform as ICE Brent, Murban and Platts Dubai Crude Oil futures contracts, the new Midland WTI American Gulf Coast contract can also offer significant capital efficiencies to the industry and provide industry-leading quality that buyers have grown accustomed to in the Houston market," he said.

According to EIA forecastsglobal consumption of petroleum and liquid fuels will average 97.7 million bpd for all of 2021, a 5.4 million bpd increase from 2020. US crude oil production averaged 11.2 million bpd in March, up 1.4 million on February. 

Share article