The recent oil spill in the Israeli desert appears to have burst more than just piplelines. It also bursts the bubble of secrecy around one of the most clandestine Petroleum operations in the Middle East, orginaly jump started in the late 1950s by the Baron de Rothschild (the French cousin of the famous British Bankster) and the Iranian Shah, which led to the formation of the nearly extraterritorial oil company EAPC – the owner and operator of the Eilat-Ashkelon pipeline – so far one of the best guarded secrets in Israel. The following investigative report by Maariv Online sheds light, for the first time, on this fascinating piece of history.
First, it should be noted: The Arava oil leak, the largest ecological disaster in the history of Israel, is the responsiblity of the EAPC Pipeline Company – but has no direct connection to the ownership structure of the company and its secret ties to Iran. The Company is subject to all EPA guidelines, and is committed to act on them. A senior source involved In the case told me that the fatal leak occurred as a result of a technical error. Because of the construction of the new airport in the Timna Valley, EAPC had to copy a section of pipeline and connect the old and new pipe. Valve connection lasted four hours, which was had to be carried out when the oil is flowing slowly in the tube. Cumulative discharge pipe without many gases, which may cause a powerful explosion.
Thus, when the discharge began, one broken valve and 5,000 cubic meters of gas – or about 5 million liters – ran and gathered in pools left in the loess soil of the prairie. This is the diffusion in the soil relatively very slow, which may hinder the penetration of contamination to groundwater. By the way, a few years ago there was a leak on a smaller scale, darkened by the sun, a few dozen miles north of the current disaster scene, the IDF tractor hit oil pipeline. But in spite of the above, the fact that the EAPC is one of Israel’s secrets, which operates under a special law dating back to 1968, providing immunity from proper public oversight (of the State Comptroller, the Knesset and the media), and that all that is written about it in the media requires submission to the censorship for review – intensifies the feeling, the justified or imagined, as if the company has something to hide.
EAPC (Eilat-Ashkelon Pipeline Company), is part of an entity called trans Asiatic oil, a partnership formed between the Government of Israel (through Ministry of Finance) and the national oil company of Iran, NIOC, ever since Iran de facto recognized Israel in 1951, bilateral relations have developed steadily, until they came to a strategic partnership in the 1970s. It had four main components: Iranian assistance for the immigration operations of Jews from Iraq organized by the Mossad. Iranian-Israeli intelligence Cooperation (Mossad, Shin Bet and the army) helped to establish, train and operate the Iranian army and the Sawak unit – Iranian security service. In return Israel’s intelligence organizations were aided by Iran for the purpose of gathering information and deploying agents in Iraq to assist the Kurdish revolt, and to deliever oil supplies to Israel.
Military cooperation focused on since ’75, on Iranian investment of $ 1.2 billion in several projects of research and development of Israeli arms. These initiatives, whose code name was “contact”, included, among other things, the establishment of Soltam munitions plant in Iran, Lavi jet development, development of sea-sea missile based on Gabriel technology, and according to foreign – development of an upgraded surface-to-surface”Jericho” missile,the range to about 600 km. The rise of Ayatollah Ruhollah Khomeini to power in ’79 ended the cooperation, but by than Iran transferred several hundred million dollars for the project, as claimed in advertising.
The first oil contact between Iran and Israel an instructive article can be read from 2007, which also sheds light on the circumstances in which it was established trans Asiatic oil. Uri Bialer’s research, “Fuel Bridge across the East”, is based on documents declassified in Israel and the UK and interviews with people involved in the matter, and is published in the journal “ISRAEL STUDIES”. By the mid-50s, Israel received its oil supplies from the Soviet Union, Kuwait (under British rule) and international oil companies.
But in 1955-1956 these ties were severed, and Israel was forced to look for new sources. Through secret ties with Iran, Israel asked the ruler, the Shah, and sought to make Iran its main oil supplier. Iran hesitated for fear of harming relations with Arab countries, but after the Sinai Campaign Iranians were convinced and agreed to supply Israel with oil. In the Israel-dominated Sinai peninsula after the Sinai Campaign, Israel “confiscated” pumps and pipes from Italian and a Belgian company operating an oil field in Ras Sudar Sinai. With that equiipment it built the Eilat-Ashkelon Pipeline. Most of the money was of the Rothschild family, with a majority of shares in the venture. The project is called “Tri-Continental”, and as required by the Iranians, who wanted to conceal their involvement in the sale of oil and in the joint company, was established at the same time a secret partnership called “Fimerko”, recorded in 1959 Liechtenstein tax shelter.
Iran had 10% of the partnership. Oil tankers from Iran sailed to Eilat, and from there it was sent via a small pipe (diameter 40 cm) to Beersheba. After the Six-Day War and the closure of the Suez Canal, Israel persuaded the Shah, whose code name was “landlord“, take advantage of the new situation and form a joint venture and expanded oil. Thus was established the trans Asiatic oil, equal partnership between the Israeli national oil company, NIOC. the main concern of opponents of the initiative in Iran was that if the collaboration will be revealed, it will be used Arab countries to attack Tehran. At the request of Iran, trans Asiatic oil and its sub entities registered in Switzerland, Panama and Canada, to hide the Israeli partner and present it as a foreign company.
Canadian registered company called EPC received the concession to build and operate the project. The owners, as they appear to the Registrar of Companies, are Juicy Marco Eilat Corporation, registered in Panama. After the Shah gave his consent, the main difficulty was in finding funding for the initiative, which cost was estimated at $ 85 million – a huge sum in those days. Baron de Rothschild refused to finance the project, arguing that it would not be profitable. Israel finally managed to get funding representatives from the German bank Deutsche Bank, through which transferred part of the money reparations in the 50’s and 60 by the way, Chairman of Deutsche Bank, Hermann Josef Abs, who responded to the Israeli-Iranian request had a Nazi past: he was responsible for the Bank’s foreign businesses since 1938 and after world War was jailed for several months by the Allies.
Apparently, however, it did not prevent Israeli representatives from having with close, friendly ties with him. Israel opertated the trans Asiatic oil company as if it were a foreign company. Is acquired from the Rothschild family the pipeline to Beersheba, and placed next to a larger pipe (diameter of one meter) from Eilat to Ashkelon, where they also built an oil terminal for unloading and loading. Construction of the terminals was completed in 1969, and the Israeli government has granted the company an exclusive franchise and store the oil to 49 years, to 2017. The closure of the Suez Canal made it difficult to supply oil to Europe from the Persian Gulf, and tankers were forced to sail long route around the Cape of Good Hope. The idea behind the establishment of the company was to shorten the shipping lanes and the delivery time, and thus of course earn more. Oil tankers were loaded in Iran, sailed to Eilat, unloaded at the terminal and the oil was piped to Ashkelon. Most of it was loaded onto tankers bound for Europe, and a small percentage was used for Israel’s energy needs.
NIOC sold the oil to trans Asiatic oil below the market price, and gave it credit for three months. At its peak was the company was an economic empire worth billions of dollars. It established a subsidiary, EAPC, who owned the two pipelines, and oil storage container farm in Ashkelon and Eilat. It bought or leased a fleet of 160 tankers, and the target was to reach about 50 million tons of oil a year – but it has not been reached. In the peak year, 1970, ten million tons flew through the pipeline. Even so, the business was very profitable. but after ten years of prosperous coming crisis. the shah’s regime was weakened. two months before Khomeini came to power NIOC stopped selling oil to trans Asiatic, in effect paralyzing it .
One of the first results of Khomeini’s rise to power was to sever ties with Israel. Companies and many Israeli businessmen operating in Iran in construction, communications, infrastructure, drugs and commerce had left already in the twilight of the Shah.
Legal red tape
In the early years after the Islamic revolution the Israeli managers of trans Asiatic oil attempted secret talks with representatives of the Iranian National Oil Company to dismantle the partnership in an orderly fashion. But the Iranians broke off contact and refused to hear anything from Israel. trans Asiatic oil sold, often at a loss, many oil tankers, laid off dozens of employees and closed operations and offices abroad. What saved it from bankruptcy was the peace treaty with Egypt from 1979, in which Israel undertook to Egypt to sell oil in exchange for the loss of oil wells in Sinai. Oil Egypt, about 1.5 million tons per year, arrived in tankers to Eilat, from there via the pipeline to Ashkelon and then to refineries in Haifa and Ashdod. Today through intermediaries oil comes from various sources such as the Gulf emirates and even Iran, as revealed three years ago by the US government who blacklisted tankers from the Singapore company owned by the Ofer brothers (Israel’s counterparts to the Rockefellers), after it became clear that oil tankers came from Bandar Abbas port in Iran, and thus violated the US sanctions regime on Iran.
The man who rescued the Ofer Brothers was surprisingly the same man to manage the international campaign of Israel against Iran’s nuclear program and advocated the imposition of severe international sanctions – Mossad chief Meir Dagan. In 1985, Iran began to show a renewed interest in oil and trans Asiatic Via attorneys in Europe they demanded that the company pay its debts to NIOC. The debts were divided into three: an indirect debt of Paz, Sonol and Delek, who bought oil directly from the National Iranian Oil and estimated values of 1979 by approximately $ 100 million; direct debt of trans Asiatic oil, oil in the pipeline credit for three months, was estimated then more than 100 million dollars and has since swelled and is estimated at $ 2 billion, and another debt relating to money that was in joint bank accounts.
Iran claimed that Israel took over the property and assets of the company. Upon receiving the Iranian claims were made to the attorney of trans Asiatic oil attorney Elhanan Landau, former legal adviser to the Ministry of Finance and was very familiar with the subject. After his death, he was replaced by his partner, Zvi Nixon, who continues to be General Counsel to date. The line was formulated that responsibility lies with the NIOC, because it went off unilaterally honoring its commitments to trans Asiatic oil, causing it severe damage. Israel proposed holding discussions about all the joint enterprises of countries to bring accounting and payment of debts. Iran refused and demanded the debt for the oil connections only.
When Israel rejected the demand, NIOC activated ther clauses that stated that in dispute to send the issue to arbitration. Over the years, several mechanisms have been established arbitration and litigation took place in Switzerland, at the Paris commercial international law and third in another European country, probably the Netherlands. Alongside Landau and lawyers on behalf of Israel and Nixon were also other lawyers, including former justice minister Haim Zadok. After his death, was put into the picture Attorney Dori Klagsblad. All the attorneys and senior Finance Ministry, the Ministry of Justice, and in EAPC are privy, signed a special confidentiality statement and to remain silent.
Approach adopted by Israel since the start of the discussions is deliberate procrastination. This is because she understood the arbitrator may rule against and Iran will have to pay hundreds of millions if not billions. For years Israel even refused to pay the salaries and expenses of the arbitrators. Only a few years ago the company started paying its share of the arbitration. In addition, Israel has accused Iran of vicarious responsibility to the situation, and did everything possible to avoid paying a single penny. The only beneficiaries of the situation are the lawyers and arbitrators, who receive handsome fees. On behalf of Iran arbitrations used its legal advisers operating in Europe, and other detail stand at the head of Swiss law.
About a decade ago, after nearly 20 years of litigation, the arbitrator ruled that the three Israel fuel companies would pay Iran a few tens of millions of dollars. Originally the Iranians demanded hundreds of millions, but the demand was reduced acceptance of the claims of the Israeli companies that have suffered serious damage due to the behavior of the Iranians. It is unknown whether oil companies agreed to pay – probably not. Concurrently arbitration in Paris and Switzerland of trans Asiatic oil. Swiss arbitrator died several years ago and replaced by another. Recently there has been some development in the case when the arbitrator ruled that a justice Iran’s claim that he should be compensated in the amount of several million dollars. Israel, appealed the decision, does not have at this time to pay the money. However, she paid several hundred thousand dollars for the expenses of the arbitration. The discussions are expected to continue. In 2017 the said concession can expire EAPC. It is still unclear if the government decides to extend it, and if so under what conditions.