Egypt, Libya weigh USD 1 bn oil pipeline

Egypt and Libya are nearing an agreement on an 800-km oil pipeline connecting Tobruk with Alexandria. The proposed project, preliminarily estimated to cost more than USD 1 bn, would carry Libyan crude directly to Egyptian refineries on the Mediterranean coast. The two sides are discussing financing, implementation, throughput, and the pipeline’s final capacity.

Back from the shelf: Egypt and Libya agreed in 1997 to develop a pipeline between Tobruk and Sidi Kerir — now a Mediterranean oil hub west of Alexandria — but the project was never built. The latest proposal has yet to disclose the precise landing point or which refineries would receive the crude. Midor, for instance — the Alexandria cluster’s largest refinery — can process some 170k bbl / d.

The pipeline would give both sides something they need. Egypt could turn Libyan crude into fuel for its domestic market or products for exports — the country exported 2.3 mn tons of petroleum products in 1H. Libya, producing around 1.48 mn bbl / d of crude and condensates, could use Egypt’s refining capacity to secure petroleum products at home and export any surplus.

Why now: Egypt is looking west after disruptions at Hormuz halted crude supplies, seeking to import at least 1 mn barrels of Libyan oil a month as a replacement. The pipeline would turn that emergency sourcing shift into a fixed supply corridor that bypasses Hormuz and maritime transport altogether.

Egypt is trying to keep its refineries fed

Egypt’s government has contracted 11.5 mn barrels of crude oil for August and September, up 15% from the same period last year, Al Arabiya reports, citing an unnamed government official. The two-month procurement program carries an estimated USD 920 mn price tag, with the state-owned Egyptian General Petroleum Corporation settling the bill with foreign suppliers via short-to-medium-term credit facilities to ease immediate balance-of-payments pressures. Around 6 mn barrels are scheduled to land this month during the peak summer demand window, with the remaining 5.5 mn barrels arriving in September.

Why it matters: The extra crude will help keep local refineries running through peak summer demand, allowing the country to produce more fuel locally rather than rely as heavily on higher-cost finished-product imports. Domestic production currently covers around 60-65% of petroleum-product demand, according to the official. Egypt’s refineries are already running at around 80% capacity, up from 60%, as the government leans on domestic refining to reduce reliance on imported finished fuel.