Jordan to Build LNG Terminal in the Port of Aqaba
Jordan is about to sign an agreement to build a terminal for liquefied natural gas (LNG) in the Port of Aqaba, with gas expected to flow from the projected facility in November next year, Jordan Times has reported. Construction of the terminal is expected to take around 15 months, energy minister Mohammad Hamed said, nothing that tenders to export gas to the terminal are currently being examined.
Jordan has been historically reliant on imported energy to satisfy its domestic needs. The kingdom received its natural gas supplies from Egypt through the Arab Gas Pipeline (approx.. 3 billion cubic meters – close to 80 percent of its domestic gas consumption – at a cost of nearly a quarter of its GDP). The disruption in the flow of natural gas from Egypt to Jordan in the aftermath of the Arab Spring that toppled President Mubarak forced Jordan to import expensive fuel products for electricity generation. Fuel from Saudi Arabia increased the kingdom’s energy bill and by consequence electricity prices. The total bill increased by at least 60% totaling around USD 4.5 billion.
Jordan had to respond, and quickly, to the severe energy crisis affecting its people. Austerity measures aimed at reducing public spending such as subsidies lift were adopted. Jordan also took various initiatives in an attempt to diversify its energy portfolio and develop its indigenous resources. Oil shale, natural gas and nuclear projects were launched in the hope that the country will reach energy self-sufficiency by 2020. The Kingdom is also keen to increase its reliance on alternative and renewable energy sources taking advantage of its long hours of sunshine and high solar levels. The speed of wind, of 7 to 9 meters per second, further encourages the use of renewables. The Government seeks to boost solar and wind energy’s contribution to the national energy mix from 1 to 10 per cent by the end of the decade.
Neighboring Israel is also eyeing to export its newly found natural gas to the thirsty kingdom. A final decision on gas exports has not yet been formulated in Israel but it is believed that it will attempt to sell its resources to its immediate neighbour, Jordan. The gas transported to Jordan will most probably come from the export quota and not the domestic allocation. This precision was clear in the Israeli Cabinet’s June proposal to allocate 60% of the country’s offshore gas reserves for the domestic market and 40% for export when it added that exports to neighbors including Jordan and the Palestinian Authority would come from the export quota (ie the 40%).
Importing natural gas from Israel would be a great substitute to Egyptian gas given the proximity of the two countries and Jordan’s desperate need for natural gas while it develops its indigenous resources. Such a move might however be politically fraught given the tensed relationship between Israel and its Arab neighbours. The majority of Jordanians being of Palestinian descent, cooperating with Israel on energy matters is a sensitive move. Jordan has suffered tremendously from its natural gas dependence on Egypt and whether it is likely to move its dependency on Israel is very questionable.
Karen Ayat is an analyst focused on energy geopolitics in the Eastern Mediterranean. Follow Karen on Twitter: @karenayat