ISRAEL: THE IMPORTANCE OF SINAI OIL

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T00608R000500160001-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 14
• Document Creation Date: December 19, 2016
• Document Release Date: June 9, 2005
• Sequence Number: 1
• Publication Date: February 1, 1975
• Content Type: REPORT

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Israel: The Importance of Sinai Oil
Secret
ER 1B 75-1
February 1975
Copy No.
Approved For Release 2005/06/13 : CIA-RDP86T00608R000500160001-0
 25X1 Approved For Release 2005/06/13 : CIA-RDP86T00608R000500160001-0
Approved For Release 2005/06/13 : CIA-RDP86T00608R000500160001-0
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1. Israel pumped 100,000 barrels per day (b/d) of crude from the Sinai
oilfields in 1974, which was 70% of its daily petroleum consumption. Tel Aviv's
remaining consumption was met by crude oil imports from Iran. Sinai oil has been
a boon to Israel because of the rapid rise in the cost of imported oil. All of the
increase in Israeli oil consumption in the past few years came from stepped-up
production from Sinai.
2. The major foreign exchange cost to Israel of Sinai oil is the setting aside
of payments to an Italian firm that has an interest in the oilfields. That payment,
together with other minor foreign exchange costs, totals less than $100 million.
At current world prices, an equal volume of crude from Iran would cost about
US $400 million.
3. Israel has taken a short-run view in administering the oilfields in Sinai
in recent years. It has concentrated on reworking the Egyptian fields to maximize
production rather than finding new oil supplies in the area. This approach reflects:
? the vulnerability of the fields to Egyptian attack,
? limits on the long-run potential of the oilfields themselves, and
? the possible negotiation of a reversion of the fields to Egypt.
4. Finding a new source of crude to replace Sinai oil should not prove
difficult - Iran can supply the oil and the Shah has indicated a willingness to
do so. But, with foreign exchange reserves in short supply, Israel would have to
cut other imports to accommodate a $340 million rise in its foreign oil bill, unless
compensatory US aid were available.
? The Setting
25X1 A 5. The capture of the Sinai oilfields from Egypt in the 1967 war added
considerably to Israeli oil resources. Prior to that war, Israel had been meeting
Note: Comments and queries regarding this publication are welcomed. They may
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