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Yanal Nawaf al-Baroumai

Jordan turns to Israel for gas supplies

Sabotage to Egypt's Sinai gas piplines is frequent [Getty]

Date of publication: 31 October, 2014

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Although energy problems are nothing new for the kingdom, recent events have forced Amman to look to alternative sources.

Jordanian Minister of Energy Mohammad Hamed has defended the decision to import natural gas from Israel, as cuts to imports from Egypt and Iraq leave the country with an energy crisis and huge financial losses.

Jordan imports around 24 million barrels of crude oil each year. But rising domestic energy consumption currently costs the country $2.8 billion annually. 

The Amman-based National Electric Power Company [NEPCO] agreed the preliminary deal with the US Noble Energy company to import gas from Israel to make up for unreliable Egyptian supplies, but Jordanian officials have been keen to distance themselves from the agreement.

"This is a deal between two companies, the state is not a part of it,” said Hamed.

The agreement has faced criticism in Jordan, particularly as it comes close to the anniversary of the controversial 1994 Wadi Araba Treaty - when the kingdom became the second Arab country to sign a peace accord with Israel.

The majority of Jordan's population is of Palestinian origin.

Attacks

The al-Arish-Aqaba pipeline, which passes through Egypt's volatile Sinai peninsula, has been subject to more than 18 attacks by militant groups this year. Almost all of Jordan's gas consumption comes through this network, which has caused energy problems for the country, with supplies from North Africa intermittent at best.

In July 2013, supplies to Jordan dried up completely. It has forced NEPCO to rely on diesel to generate electricity for the country - and by the end of this year it is thought that it will cost Jordan’s economy $6.6 billion.

The energy minister insisted that this has forced Jordan to turn to Israel for its energy needs.

"We stopped importing Iraqi petrol at the start of the year because of ongoing events in the country," Hamed told al-Araby. "In the past, the oil pipelines from Iraq to Aqaba brought in a million barrels a day of surplus Iraqi oil."

Crude oil from Iraq is refined by the Jordan Petroleum Refinery Company, which produces only 50 percent of Jordan's fuel. Now the country has to rely on the import of ready-made derivatives to cover its needs.

Oil shale reserves are said to cover 60 percent of Jordan’s territory

Hamed is hopeful that the situation is temporary and that Jordan will recover from the crisis by the middle of next year. "The government has made great strides in recent years to tackle the energy crisis and to reduce its effects on the nation's economy," the minister said.

To cope with the situation, several projects have been launched to create domestic energy production, including Aqaba Natural Gas Terminal and a solar power plant. The Qatari-based Nebras Power Company, along with Mitsubishi subsidiary Diamond Generating Europe [DGE] and Jordan's Kawar Group have invested more than $100 million into the power plant.

There might be some light at the end of the energy tunnel, as oil shale reserves are said to cover 60 percent of Jordan's territory. This could help answer Jordan's energy woes, particularly after recent technological breakthroughs have made extraction - although environmentalists are naturally concerned.

"We made a deal at the start of this month on a three-year project to extract shale oil with Estonian company Enefit in Attarat Um Ghudran," said Hamed. "This project will be unique to the region and is expected to gain around $2.4 million in total investments." Jordan is believed to hold 70 billion tons of oil shale reserves, the fourth largest stocks in the world.

The energy crisis has compounded other economic problems for the kingdom, which had a budget deficit of $1.84 billion last year and around $1.5 billion this year. This comes in addition to a public debt of $27 billion, which makes the race to establish more reliable energy supplies more pressing than ever.                 

 

This article is an edited translation from our Arabic edition.

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