Israeli Government Considers Privatizing Secretive Oil Pipeline Company KESAA
The Israeli Government Companies Authority is exploring the potential privatization of KESAA (Europe Asia Pipeline Company), a highly secretive state-owned firm operating under a confidentiality order. The evaluation is in early stages, focusing on economic aspects, with a final decision on feasibility yet to be made. KESAA's core operations include unloading, loading, storage, and transportation of crude oil and refined products through its ports in Ashkelon and Eilat. The company is responsible for importing about 40% of the cooking gas used in Israel and provides services to the natural gas sector. It also manages storage tanks with a total capacity of 3.7 million cubic meters and operates three crude oil pipelines, plus a 750-kilometer fuel products pipeline run by the state-owned Energy Infrastructure Company (Tesha).
At a recent meeting of government company leaders, Roy Kahlon, head of the Government Companies Authority, highlighted ongoing privatization and public offering efforts, noting the intention to examine KESAA's privatization within the coming year. He remarked, "Imagine what a private entrepreneur could do there." However, KESAA's activities and financial data remain classified, and its omission from the 2025 Government Companies Authority report due to confidentiality surprised some government insiders. One official called the idea of privatizing a company with such strict secrecy "unrealistic."
KESAA was founded in the late 1960s as a strategic joint venture between Israel and Iran during the Shah's reign, originally named the Eilat-Ashkelon Pipeline Company. It transported Iranian oil from Eilat to Ashkelon under a secret agreement. The company was renamed KESAA in 2017 after its 49-year concession expired. Over the years, KESAA has faced environmental controversies, including significant oil spills such as the 2014 incident that polluted the Evrona Nature Reserve.
The 2025 report from the Government Companies Authority shows that revenues of about 70 government companies reached approximately 113 billion shekels, an 11% increase from 2024, mainly driven by defense companies Israel Aerospace Industries and Rafael amid rising demand for weapons domestically and internationally. Operating profits rose 64% to 9.5 billion shekels. The Authority is pushing to accelerate public offerings for Rafael and IAI, though upcoming elections may delay these plans. IAI is closer to issuing minority shares valued around 100 billion shekels, while Rafael's offering remains in early stages amid opposition from the Finance and Defense Ministries to a proposed off-Tel Aviv Stock Exchange listing.
