Ammon News - By Karen Ayat/ Energy Tribune

It is not just the protagonists that have been affected by the Gulf War and the more recent, Arab Spring. Jordan had to endure a series of mishaps that ushered a crisis of major proportions. Jordan is in a difficult situation as it struggles to recover from a severe energy crisis. The Kingdom, historically considered energy-poor, imports 97% of its energy needs.

Iraqi Oil Imports

Since 1985, a barter agreements with Iraq removed most of Jordan’s oil bill from the balance sheet. Things changed in 2003 when the US-led invasion of Iraq exposed Jordan’s oil supply vulnerability. With no access to free oil and in the absence of indigenous resources, the Kingdom was forced to import its oil at international prices.

Egyptian Gas Imports

In June 2001, Jordan and Egypt signed a Framework Agreement under which Egypt committed to sell a defined quantity of natural gas to Jordan. The Arab Gas Pipeline, a trans-regional 1,200 km gas export pipeline built to carry natural gas from Egypt to Jordan, Syria and Lebanon, transported a total of approximately 3 billion cubic meters of Egyptian gas to Jordan satisfying 80% of Jordan’s domestic needs. The imported natural gas price was indexed to oil prices, with a floor and a ceiling.

Expensive Fuel Imports

The country suffered from a second energy shock when the Arab Gas Pipeline was attacked several times following the Arab Spring in 2011. The repeated damage to the pipeline resulted in the disruption in the flow of gas and prompted an increase in imports of expensive fuel products for electricity generation. As a result, the total energy bill jumped by at least 60% to around $4.5 billion (approx 12% of Jordan’s GDP). Jordan is struggling to meet a domestic demand that is growing by more than 7% per year due to a growing population and industrial expansion, said Alaa Batayneh (Batayneh was minister of energy and mineral resources as well as minister of transport in the cabinet of Abdullah Ensour in 2012). Batayneh further added that the Syrian immigration alone resulted in a 10% population increase in just over a year.

Jordan Seeks to Decrease its Reliance on Imported Energy

Khaled Toukan, Chairman of the Jordan Atomic Energy Commission and previously Minister of Energy and Mineral Resources, stressed on the importance of developing a diversified national energy portfolio constituted of natural gas, oil shale, renewables and nuclear to allow the kingdom to achieve energy security.

Natural Gas

BP announced in October 2009 that it is to join Jordan’s state-owned National Petroleum Company (NPC) to exploit the onshore Risha concession in the north east of the country. BP invested $270 million to explore and evaluate the Risha block. Alaa Batayneh believes that such a large investment signals BP’s trust in the quantities of natural gas in the Risha field.

Oil Shale

The existing oil shale potential reserves in Jordan, from Ma’an in the south up to the Yamouk River in the north, are estimated by the United States Geological Survey (USGS) at about 5.2 billion tonnes (38 billion barrels.) Royal Dutch Shell invested $100 million to explore oil shale in Jordan. In 2009, the Government of Jordan signed a concession agreement with Shell International to explore oil from oil shale in order to realise Jordan’s master plan: energy self-sufficiency.

Nuclear

Nuclear reactors would contribute in reducing Jordan’s total dependence on imports and constitute a hedge against the cyclicality of oil prices. Additionally, they would allow the Government of Jordan to better manage disruptions to the current account as well as support its capability to fight inflation and sustain a stable currency exchange rate. Jordan is estimated to have 65,000 tonnes of uranium oxide resources in the central part of the country and an additional 100,000 tonnes found in phosphates, said Toukan.

Iraqi-Jordanian Pipeline

Amman and Baghdad signed an agreement to construct a dual 1,680 km pipeline that will run from Iraq’s southern oil-producing region, Basra, to Anbar province and then to Jordan’s port city of Aqaba. It will supply Jordan with 850,000 barrels of oil as well as around 258 million cubic feet of gas a day and is expected to be fully operational by 2017. ‘The Iraqi-Jordanian pipeline is a project of extreme importance’, said Toukan. ‘Iraqis want to diversify their export routes from Iraq while Jordan is in a serious need for energy. It is therefore a win-win situation for both parties’, he added. Jordan will use 100 million cubic feet of gas per day and the excess will be exported through Aqaba generating an estimated $3 billion a year in transit fees for Jordan.

LNG port in Aqaba

‘An LNG port in Aqaba would allow imports of liquefied natural gas as a supplementary source to satisfy the current and future demand of natural gas, and guarantee a continuous flow of gas, with competitive prices to assist in reducing the cost of electricity production’, said Alaa Batayneh. The project consists of the construction and equipping of a new liquefied natural gas port in Aqaba with an operational throughput of 490 MMcf/d and a maximum throughput of 790 MMcf/d. The project started in September 2012, and the port is scheduled to receive the first LNG shipment by the last quarter of 2014.

‘Our efforts must be consistent and transgovernmental for Jordan to become energy independent by 2020 and an energy exporter by 2025’, said Toukan. ‘By reducing our reliance on imported energy, we will benefit on many levels: We will reduce our energy bill, we will achieve energy security and we will reduce the price of electricity restoring the stability in the Kingdom. The years ahead will be difficult, but persistence and continuity in planning will pay’, he added.