Ammon News - AMMONNEWS - Jordan is pressing Israel for trade and financial concessions before it signs off on a groundbreaking but politically sensitive multibillion-dollar agreement to buy gas from the offshore Leviathan field, a Jordanian government minister said.

Jordan signed a letter of intent in 2014 to import some 1.6 trillion cubic feet from Leviathan, located off Haifa, over 15 years for its National Electric Power Co in a deal valued at some $15bn at the time.

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Investors in the Leviathan consortium, led by Houston-based Noble Energy and Israel’s Delek, are touting the proposed deal, along with plans to sell the offshore field’s gas to Egypt, as a geopolitical game-changer that would help to transform Israel’s fraught relations with its Arab neighbours.

However, Jawad Anani, Jordan’s deputy prime minister for economic affairs and industry minister, said that the country needed the concessions from the Israeli side in order to “mitigate the backlash” he expects the gas deal will bring.

“The deal is almost done in terms of agreements and conditions, but we still have problems,” Mr Anani told the Financial Times in an interview. He said that Jordanian negotiators had asked their Israeli counterparts to allow Jordan to export goods worth $1bn per year to the Israeli-occupied West Bank, or between a quarter and a fifth of the total Israel itself exports to the Palestinians.

Israel and Jordan signed a peace agreement in 1994, but trade between the two countries is minimal and skewed heavily in favour of Israel. Israel controls the Palestinians’ external borders, including the eastern one with Jordan, and Israeli firms are the main exporters of goods to the West Bank, by far.
“After 22 years of peace with Israel, we have not been able to expand our trade with the West Bank,” Mr Anani said. “I want a $1bn share of the West Bank market which the Israelis now monopolise.”

It is unclear how Israel might respond to the Jordanians’ request for a greater share of the West Bank market. Importers there routinely accuse Israel of using regulations in areas such as quality standards to keep goods from third countries out and favour its own producers.

Mr Anani also said that his government was pressing the Israelis to pay for a 26-km stretch of pipeline from Israeli’s gas main to the Jordanian border, which will be needed to transport the gas, which he said would cost about $70m. “I don’t think it’s fair for Jordan to pay for it,” Mr Anani said. “What if in the future Israel wants to use the same pipeline to export elsewhere?”

Along with the Leviathan investors, the US have been prodding Jordan to sign the gas deal. Jordanian officials have acknowledged their economy needs the new supply to replace their former imports of cheap Egyptian gas that were cut off after the political turmoil that followed the Arab Spring revolts that began in 2011.

However, in Jordan — where more than half of the population are Palestinians — the deal has sparked street protests from activists who favour boycotting Israel, and objections in parliament.

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Mr Anani said that Jordan’s government might need to enshrine the gas agreement in law, and would have to “manage the public outcry” that would follow the deal.

“I am trying to mitigate the backlash by saying I am taking Israeli gas, but at the same time exporting to the West Bank,” he said. “I am creating jobs in Jordan for the Palestinian market.”

Noble declined to comment on the Jordanian official’s remarks. Delek also declined to comment “due to an ongoing negotiation”. Israel’s energy ministry declined to comment.

Israel and Jordan’s pro-western monarchy collaborate closely on security, but friction persists between the two countries on political issues, including the status of Jerusalem’s holy sites.

Jordan in 2014 temporarily recalled its ambassador to Israel after clashes between Israeli security forces and Palestinian protesters about Jerusalem’s al-Aqsa mosque.

*FT