Egypt and Libya are reportedly close to an agreement to construct an 800-kilometer oil pipeline linking Tobruk with Alexandria, establishing a direct route for Libyan crude to reach Egyptian refineries as the conflict with Iran disrupts Egypt's conventional Gulf supply channels.

The proposed pipeline would carry an estimated cost exceeding $1 billion, according to a government official who spoke with Asharq Bloomberg on condition of anonymity. The two nations are currently examining financing structures, implementation plans, and the pipeline's ultimate capacity, which will depend on Libya's available export volumes and the processing capabilities of Egyptian refineries.

The initiative emerges as Egypt works urgently to replace crude supplies disrupted by the closure of the Strait of Hormuz. Cairo is seeking to import a minimum of 1 million barrels of Libyan crude per month following the suspension of Kuwaiti supplies, according to an Egyptian government official previously cited by Asharq Bloomberg.

A direct Tobruk–Alexandria pipeline would grant Egypt access to Libyan crude without dependence on tanker shipments, while simultaneously offering Libya an additional outlet for its oil as output reaches its highest level in over a decade. The overland route would also bypass the Suez Canal and SUMED pipeline complex, Egypt's existing east-to-west oil transit infrastructure, by drawing supply from a western neighbor rather than the Gulf.

Libya is currently producing approximately 1.43 million barrels per day of crude along with an additional 49,000 bpd of condensate, bringing total liquids production to roughly 1.48 million bpd. National Oil Corp. Chairman Masoud Suleman has stated that the country is working toward a target of 1.5 million bpd. The figures are notable given that Libya's oil sector has been repeatedly disrupted by political instability and internal conflict since 2011, making sustained output near current levels a relatively recent development.

The pipeline plan follows discussions between Egyptian Prime Minister Mostafa Madbouly and the Prime Minister of Libya's Government of National Unity, Abdul Hamid Dbeibeh, focused on broadening cooperation in oil refining, natural gas, and electricity.

For Libya, the project could open another market for its rising production while enabling a portion of crude to return as refined products for domestic consumption. For Egypt, the arrangement would supply additional feedstock for its Mediterranean refining system — anchored by facilities in and around Alexandria — at a time when Gulf supply routes remain vulnerable to the ongoing Iran conflict.

Libya's National Oil Corp. did not respond to Asharq Bloomberg's request for comment.

By Charles Kennedy for Oilprice.com