Senior figures in the Israeli natural gas sector and Noble Energy senior VP Eastern Mediterranean Region Keith Elliot today predicted that an agreement for the export of gas to Jordan would be signed soon. At a conference this week in New York, Elliot asserted, "That’s one example of a situation where Israel has the opportunity to take advantage of the gas not only for its own internal benefits but for a broader geopolitical benefit," adding that his company was in the process of “consummating a contract” to provide Jordan with natural gas from the Leviathan gas reservoir.
At the same time, the Jordanian parliament yesterday approved investments by Israeli companies in Jordanian infrastructure projects, following several months in which such investments were forbidden. In September 2014, the Leviathan partners signed a letter of intent to supply 45 BCM of gas over 15 years to Jordanian National Electric Power Company (NEPCO). The contract's amount was estimated at $15 billion. The discussions about the gas plan, however, which have been taking place for nearly 18 months, also led to an impasse in the negotiations between the two countries.
The deal is economically worthwhile for both Israel and Jordan. The distance between the Israel and Jordanian gas transportation networks is only a few dozen kilometers, and NEPCO is considered a reliable customer with a high payment ethic, in contrast to Egypt, for example, which still owes billions of dollars to international energy companies. Jordan does not have its own energy resources, and has remained dependent on imports to this day, despite having been burned by its suppliers quite a few times.
Saudi Arabia halted the supply of its oil to Jordan, after the latter supported the Iraqi invasion of Kuwait. Iraqi oil replaced Saudi Arabia oil until the fall of Saddam Hussein's regime in 2003. Egyptian gas began flowing in that year, supplying a significant proportion of Jordan's energy needs, but was cut off completely in 2013, after repeated explosions in the Arab gas pipeline.
Since then, Jordanian industry has been operating on expensive and highly polluting fuel, such as diesel oil. Up until a year ago, this fuel cost six times the price that Jordan paid for Egyptian gas, and took up 30-40% of the state budget in the past two years. At the same time, Jordan has been importing liquefied natural gas (LNG) in the past two years, among other things from Qatar, and from Royal Shell, Vitol, and others.
Up until now, there have been two main obstacles to signing a final gas import agreement: regulation in Israel and poor relations between Israel and the Hashemite kingdom. Now that the discussions about the gas plan are nearing an end (the cabinet this week approved the gas plan with the less restrictive stability clause) , however, it appears that the two countries are ready to move ahead with the agreement.
Elliot said this week that the natural gas that has been flowing from the Tamar reservoir for the past three years had reduced air pollution in Israel and saved Israel billions of shekels. He added that Noble Energy was determined to continue its contribution with a flow of gas from Leviathan by the end of 2019. The Jordanian press and the Al Jazeera news agency both reported that the Jordanian parliament had approved new Israeli investments in the country for the first time in several months.
A senior Israeli gas industry source said today, "Jordan is waving the white flag, and signaling that it wants to import Israeli gas, and the Israeli government is also interested."
Published by Globes [online], Israel business news - www.globes-online.com - on May 25, 2016
© Copyright of Globes Publisher Itonut (1983) Ltd. 2016