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Thursday, 9 December 2021

Sumed’s oil shipments at their highest in November since May 2020

Oil shipments through Egypt’s Sumed pipeline hit an 18-month high in November, with north of 700k bbl/d of crude flowing out of the pipeline last month, data compiled by Bloomberg shows. Although this is the highest level since May 2020, it remains 150k bbl/d below pre-pandemic levels. This uptick comes 18 months after shipment activity had fallen due to covid-19 slashing demand and leading countries to cut production levels by 10%.

Poland and the Netherlands were Sumed’s biggest export markets in November, rather than the usual Mediterranean destinations of Italy, Spain, Greece and Turkey. Poland emerged as the largest buyer. This shift comes amid increasing tensions between Poland and its neighboring countries Russia and Belarus, which had been Warsaw’s biggest suppliers, prompting Poland to look towards alternative sources.

Stockpiles at the pipeline’s Sidi Kerir storage tanks have been growing over the past several months as OPEC+ ramped up its output targets, leading to crude oil deliveries to the pipeline outpacing offtake. The majority of the crude shipments to the pipeline were sourced from Saudi Arabia, according to the business information service.

Why Sumed is an attractive option for oil shipments: The Sumed pipeline allows giant shippers to carry crude from a terminal in Ain Sokhna to storage tanks near Alexandria on the Mediterranean without having to pass through the Suez Canal. Offloading some of their cargo into one end of the pipeline in Ain Sokhna allows the carriers to cross the Suez Canal (without sitting too deep in the water) and then refill in Sidi Kerir. They can also fully offload their cargo to westbound tankers stationed on the other side and move to their next consignment.

This bodes well for our energy hub ambitions: The uptake in Sumed shipments, along with our LNG exports maxing out following a summer lull and recent agreements to build subsea pipelines with Greece and Cyprus, can help Egypt consolidate its position as a regional energy hub and a key source of energy for Europe.

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