Egypt pledges to supply gas to Jordan

Leviathan gas field Photo: Noble Energy

Egypt's promises will pile pressure on the Jordanians not to sign a binding gas agreement with the Leviathan partners.

Egyptian Minister of Petroleum and Mineral Resources Tarek El-Molla this week repeated his prediction that Egypt would stop importing natural gas in 2018, and would instead supply all of its own needs. Jordanian news agency Petra reported that that at the international energy conference that took place in Oman on Sunday and Monday, El-Molla repeated his promise that Egypt would export gas to Jordan when its own supply is assured, i.e. in 2018 or 2019.

According to a news agency associated with Reuters, the Jordanian National Electric Power Company (NEPCO) signed an agreement during the conference with Egyptian-Jordanian gas transportation and supply company Fajr, which operates the Arab gas pipeline between Egypt, Jordan, and Syria. The purpose of the agreement is reportedly to strengthen the natural gas ties between the countries; no other particulars were reported. NEPCO has signed an agreement to buy natural gas from the Leviathan reservoir in Israeli waters.

Egypt's commitment to supply gas to Jordan even before Leviathan begins supplying gas is liable to increase the already strong pressure on the Jordanian royal house to neglect the agreement with Israel. "The Temple Mount messiahs and Israeli right-wing nationalistic politicians can be counted on to provide grounds for canceling the agreement to export gas to Jordan, and I will not be surprised if the agreement is suspended or canceled," says Van Leer Institute researcher Amnon Portugali. In view of Prime Minister Benjamin Netanyahu's intention to allow politicians to visit the Temple Mount, this does not sound unlikely.

As of now, Egypt produces 45.5 BCM of gas a year, compared with estimated consumption of 54 BCM, and imports the difference in the form of liquefied natural gas (LNG). The Egyptian Ministry of Petroleum and Mineral Resources expects production to grow to 59 BCM this year, after production from the Zohr, Atoll, and northern Alexandria gas reservoirs begins. These three reservoirs are projected to gradually increase their production rate and reach the impressive quantity of 46 BCM in 2019.

Another important gas reservoir in Egypt is Nooros, discovered in July 2015, at which production began in October 2016. Italian company ENI is operating the field, which supplied gas at an annual rate of 9 BCM in the first quarter of this year.

Simultaneously with its increased production, Egypt is going ahead with the construction of gas-powered power plants, and is promoting a switch to use of gas by Egyptian industry, which will increase its consumption. Nevertheless, the developments in the country are casting a shadow on the chances that Leviathan will supply gas to liquefaction facilities in Egypt, despite claims reports of intensive negotiations taking place with the Egyptians.

In an interview with the EnergyBoardroom website in late February, El-Molla repeated several times that Egypt's goal was to become a leading regional hub for oil and gas. He added that according to various studies, Egypt's natural gas potential is 6,220 BCM; in other words, the Zohr reservoir, with its 850 BCM, is only the beginning. "We're very optimistic about the chances of finding additional proven gas reservoirs," El-Molla said. "We will do many things in the near future."

Until Egypt achieves self-sufficiency in gas, it is importing surplus LNG from the Jordanian LNG terminal in Aqaba from a pipeline through which gas formerly flowed in the opposite direction. During the Oman energy conference, Egypt and Jordan signed a total of four gas contracts and memoranda of understandings, one of which, an arrangement for imports and exports between the two countries, was signed by El-Molla and his Jordanian counterpart, Ibrahim Saif.

Published by Globes [online], Israel Business News - www.globes-online.com - on April 6, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

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Leviathan gas field Photo: Noble Energy
Leviathan gas field Photo: Noble Energy
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