Egypt-Jordan

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Until Egypt's January 2011 uprising, Egypt provided 80 percent of Jordan's needs in natural gas for powering electricity plants through the Arab Gas Pipeline. The natural gas supply deal signed between Egyptian and Jordanian ministries of energy in 2004, which remains valid until 2019, stipulated that 240 million cubic feet be supplied to the Kingdom daily by Egypt. Egypt made changes to the 2004 agreement by raising gas prices from US$2.5 to US$5 for a million calories for the quantities agreed until 2019. The gas prices will be arranged every two years as per the international market regulations.[1]

Gas Disruptions

As of mid 2012, Reuters reported the supply between Egypt and Jordan has been interrupted 15 times since January 2011, as Sinai militants have repeatedly blown up the pipeline.[2] According to the Jordanian energy minister, Alaa Batayneh, natural gas supply average exports in 2011 were estimated at 87 million cubic feet, which is around a third of 2010's exports, estimated at 200 million cubic feet. The constant disruption forced Jordan to turn to costlier fuels to meet its energy needs as well as buying electrical power. This has pushed the state-owned national electricity company close to bankruptcy with a deficit reaching a record high of US$3.5 billion.[3] Jordan's King, Abdullah II, had earlier told a US journalist that the "harshest blow" to his country's economy would be "the discontinuation of the natural gas supply from Egypt". He added that at a time of rising petroleum prices, it could cost the Jordanian government over US$2 billion annually.[4]

In December 2012, Egypt resumed pumping natural gas to Jordan at 240 million cubic feet a day as stipulated under an agreement between the countries, the state-run Petra news agency cited Jordan’s Prime Minister Abdullah Ensour as saying.[5] Contrary to this, Daily News Egypt reported in early 2013 that Egyptian gas exports to Jordan have not resumed their normal levels.[6]

A Sustainable Alternative

Jordan has been holding talks to become the first country to buy natural gas from Israel. According to Wall Street Journal, the deal would offer Jordan a cheap energy source and relieve its energy crisis, while also mark a major tightening of Israeli-Jordanian relations two decades after they signed a peace accord.

Former Israeli ambassador to Jordan Oded Eran, said the supply interruptions from Egypt spurred the discussions, which have lasted several months, stating that Jordan is in the most immediate need and would be the first client for Israel. He added that a link to Jordan could be established "relatively quickly" by extending a pipeline several miles across the Dead Sea salt pools from an Israel Chemicals plant powered by gas on the Israeli shore to an Arab Potash Corp. plant on the Jordanian side. However, Mr. Eran said officials from the two governments are also discussing a deal to supply the entire Jordanian economy with gas from Israel. In that case, a separate pipeline could be established to run from the Mediterranean through the Jezerrel Valley in northern Israel to Beit Shean near the border and then into Jordan. Jordan has discussed energy-supply deals with Iraq and Qatar as well, making a deal with Israel the least attractive politically.[7]

References

  1. "Egypt compensates Jordan for gas supply disruption" Ahram Online, 21 November 2012.
  2. "Blast rocks Egypt's gas pipeline to Israel, Jordan" Reuters, 21 July 2012.
  3. "Egypt compensates Jordan for gas supply disruption" Ahram Online, 21 November 2012.
  4. "Egypt denies that it intends to cut off natural gas to Jordan" Middle East Monitor, 22 March 2013.
  5. "Egypt Resumes Natural Gas Exports to Jordan, Petra Says" Bloomberg, 20 December 2012.
  6. "Egypt’s Drop in Gas Supplies Renews Concerns in Jordan" Daily News Egypt, 29 January 2013.
  7. "Jordan, Israel Weigh Gas Deal" The Wall Street Journal, 25 June 2013.