Jordan offsets Egyptian natural gas cut with $771 mn deal to buy Israeli gas

AFP , Thursday 20 Feb 2014

Energy-poor Jordan relied heavy on Egyptian gas supplies but a spate of attacks on the export pipeline through the restive Sinai Peninsula has repeatedly cut supplies to both the kingdom and Israel

The Tamar natural gas rig
The Tamar natural gas rig (Photo: Reuters)

Two Jordanian firms have signed a $771-million deal with US-based Noble Energy to supply them with natural gas from an Israeli offshore field, local media reported on Thursday.

The Arab Potash and Jordan Bromine companies signed the agreement on Wednesday to obtain from Noble Energy and its Israeli partners 2 billion cubic metres (around 70 billion cubic feet) of gas from Israel's Tamar field for 15 years.

"The supply will start in the coming two years. The project will reduce the total production cost for Arab Potash by $357 million and for Jordan Bromine by $7.5 million in the first stage of the project," Al-Ghad newspaper quoted Arab Potash chairman Jamal Sarairah as saying.

Noble Energy owns 36 percent of the Tamar field in the eastern Mediterranean.

"The shift from heavy fuel to the less expensive and more eco-friendly natural gas is projected to produce total cost savings of 235 million dinars ($331 million, 242 million euros)," Arab Potash General Manager Brent Heimann was quoted as saying in the Jordan Times.

Energy-poor Jordan relied heavily on Egyptian gas supplies but a spate of attacks on the export pipeline through the restive Sinai Peninsula in the last three years has repeatedly cut supplies to both the kingdom and Israel.

Earlier this month unknown assailants blew up a natural gas pipeline in Egypt's Sinai Peninsula, in the fourth such attack in 2014 and the twentieth since the 2011 uprising that toppled autocrat Hosni Mubarak.

The explosion took place south of the coastal city of Al-Arish on a pipeline supplying an industrial zone in central Sinai.

Egyptian gas covers 80 percent of electricity generation in Jordan, which imports 95 percent of its energy needs.

Officials have said the disruptions in gas supplies cost Jordan at least $1 million a day.

"We are aware of the situation in Egypt and they [Egyptians] are aware of our situation in Jordan... There could be further cooperation between Jordan and Egypt beyond the joint accords signed between the two countries,” Jordan Prime Minister Abdullah Ensour said in February during a meeting with an Egyptian delegation in Amman.

“Egypt is to begin gas mega-projects and Jordan has already commenced implementing a natural gas terminal that is expected to be completed by the end of this year to import and store liquefied gas. Egypt then can export its surplus gas from Jordan," he added.

Egypt’s natural gas production shrank in December 2013 to 3.3 million tonnes, down 11.8 percent from December 2012, according to the latest data from the Egyptian Cabinet Information Centre (IDSC).

In January, IDSC showed natural gas consumption also sank 4.2 percent in December 2013, reaching 3.1 million tonnes, compared to 3.25 million tonnes the year before.

In 2013 exports of natural gas and its derivatives fell 67.3 percent against the previous year, registering some $63 million.

Short link: