Transit fees in Egypt

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Egypt plays a vital role in international energy markets through the operation of the Suez Canal and Suez-Mediterranean (SUMED) Pipeline. Transit fees are paid for oil and liquefied natural gas (LNG) shipments from African and Persian Gulf states to Europe and the Mediterranean Basin, where fees collected from operation of these two transit points are significant sources of revenue for the Egyptian government. The Suez Canal and Sumed Pipeline are strategic routes for Persian Gulf oil shipments to Europe. Closure of the Suez Canal and SUMED Pipeline would divert oil tankers around the southern tip of Africa, the Cape of Good Hope, adding an estimated 9,000 kilometres of transit, increasing both costs and shipping time. According to a report released by the International Energy Agency (IEA), shipping around Africa would add 15 days of transit to Europe and 8-10 days to the United States.[1]

Suez Canal

In 2011, 18,050 ships transited the Suez Canal from both directions, of which 20 percent were petroleum tankers[2] and 6 percent were LNG tankers. The Canal is unable to handle the VLCC (Very Large Crude Carriers) and ULCC (Ultra Large Crude Carriers) class crude oil tankers. The Suez Canal Authority (SCA) is continuing enhancement and enlargement projects on the canal to allow over 60 percent of all tankers to use the Canal.[3] In 2012, the Suez Canal marked receipts of US$5.2 billion, making it one of the largest foreign currency earners for Egypt.[4]

SCA announced in January 2013 that it would raise toll fees for all vessels passing through the strategic waterway between 2 and 5 percent starting on 1 May 2013. A 5 percent fee hike will be imposed on oil tankers and vessels transporting petrochemicals, while containers and car carriers' toll fees will increase by 2 percent, with a 3 percent increase on all other vessels. In 2012, transit fees were raised also by 3 per cent for all ships passing through the canal. The SCA justified the move at the time by noting that fees had not been raised previously for a three-year period.[5]

The SCA's decision, however, has met with some criticism. Peter Hinchliffe, secretary general of the London-based International Chamber of Shipping, said that it was not a good time for SCA to announce a fee hike, which is seemingly extremely burdensome to some commercial sectors, adding that many ship owners will find it impossible to pass the extra cost on to customers. His statement was countered by Rashad Mahmoud, of the Centre for Investment Studies at the National Institute of Planning, who was surprised by Hinchliffe's statement, adding, "Even with this transit fee hike, passage through the Suez Canal is still the cheapest and easiest route around the world and the shortest between Asia and Europe."[6]

SUMED Pipeline

The 360 kilometre long SUMED Pipeline provides an alternative to the Suez Canal for those cargos too large to transit through the Canal. Oil companies use SUMED because the largest oil tankers, such as VLCCs, cannot navigate the Suez Canal fully loaded. They send part of their cargo north through Egypt via the pipeline from the Ain Sukhna onshore terminal on the Red Sea coast and then re-load the oil at its end point at the Sidi Kerir terminal on the Mediterranean.[7] The crude oil flows through two parallel pipelines that are 42-inches in diameter with a total pipeline capacity of 2.3 million billion barrels per day.[8] The most recent figures for SUMED revenue were in 2007, where the company recorded US$210 million,[9] however, current figures are expected to be considerably higher due to increased oil flows through the pipeline.

Transit of Crude Oil and Natural Gas (LNG)

The majority of crude oil transiting the Suez Canal travels northbound, towards markets in the Mediterranean and North America. Northbound canal flows averaged approximately 535,000 barrels per day in 2011. The SUMED pipeline accounted for about 1.7 million barrels per day of crude oil flows from the Red Sea to the Mediterranean over the same period. Combined, these two transit points were responsible for nearly 2.2 million bbl/d of crude oil flows into the Mediterranean. Northbound crude transit has declined by almost half since its level in 2008 when 943,000 barrels per day of oil transited northbound through the Canal and an additional 2.1 million travelled through the SUMED to the Mediterranean. Contrarily, crude oil shipments travelling southbound through the Canal toward the Red Sea increased from 2008 through 2010, but fell slightly in 2011.[10]

Unlike oil, LNG transit through the Suez Canal has been on the rise since 2008, with the total number of laden tankers increasing from approximately 210 to over 500, and volumes of LNG travelling northbound increasing nearly six-fold. Southbound LNG transit originates in Algeria and Egypt, destined for Asian markets while northbound transit is mostly from Qatar and Oman, destined for European and North American markets. The rapid growth in LNG flows over the period represents the start-up of five LNG trains in Qatar in 2009-2010. Countries such as the United Kingdom, Belgium, and Italy received over 80 percent of total LNG imports via the Suez Canal in 2010 while Turkey, France, and the United States had about a quarter of their LNG imports transited through the Canal.[11]


  1. "Country Analysis Briefs" Energy Information Administration, retrieved 1 May 2013.
  2. "Traffic in the Suez Canal" Central Bank of Egypt, retrieved 1 May 2013.
  3. "Country Analysis Briefs" Energy Information Administration, retrieved 1 May 2013.
  4. "Balance of Payments" Central Bank of Egypt, retrieved 1 May 2013.
  5. "Egypt's Suez Canal Authority Raises Canal Transit Fees Starting May" Ahram Online, 31 January, 2013.
  6. "Suez Canal Authority to Increase Transit Fees" Al-Shorfa, 11 February, 2013.
  7. "Egypt’s Military Deploys Along SuMed Oil Pipeline, Official Says" Bloomberg, 1 February, 2011.
  8. "Country Analysis Briefs" Energy Information Administration, retrieved 1 May 2013.
  9. "SUMED: LE 1.2 Billion Egyptian Revenue from Petroleum Transportation" Egypt Oil & Gas, 10 May, 2017.
  10. "Country Analysis Briefs" Energy Information Administration, retrieved 1 May 2013.
  11. "Country Analysis Briefs" Energy Information Administration, retrieved 1 May 2013.