The first natural gas pipeline to Jordan is scheduled to begin operating in 2017, Israel Natural Gas Lines CEO Samuel Tordjman announced today. The pipeline, currently being constructed in the Sdom area by the Dead Sea, will supply gas from the Tamar reservoir to private customers in Jordan. A second pipeline to be built in the Beit Shean area is due to supply gas from the Leviathan reservoir to the Jordanian National Electric Power Company (NEPCO).
In February, the Tamar partners signed a letter of intent with private customers in Jordan to supply 1.8 BCM over 10 years. In September 2014, the Leviathan partners also signed a letter of intent to supply 45 BCM of gas to NEPCO over 15 years; the value of the contract is estimated at over $15 billion. The discussions of the gas plan in Israel, however, which have been taking place for a year, have stalled the negotiations between the two countries.
A report by the German Marshall Fund of the US about the Jordanian gas sector states, "In business terms, Jordan is an obvious market for Israeli gas. Pipeline distances are short; potential linkages between the Israeli pipeline network and Jordan’s are measured in mere tens of kilometers. The largest prospective customer, NEPCO, is a reliable partner with a reputation for ensuring its customers pay their bills." Furthermore, "In the future, gas supplies from Israel could be supplemented by gas from the Gaza Marine field."
According to the Marshall Fund, the difficulty in signing a final contract is due to two main problems: regulation in Israel and poor relations between Israel and the Hashemite Kingdom of Jordan. "Regulatory uncertainty in Israel has delayed the development of Leviathan and the expansion of Tamar. Meanwhile the political climate affecting relations between Israel and Jordan has deteriorated… The United States and the European Union, which have an interest in regional stability, should continue to exercise discreet diplomacy with a view to seeing that the preliminary agreements on imports of gas from Israel that have been signed are fully implemented… energy cooperation can reinforce political links between Israel and Jordan and help bring a modicum of stability to a troubled region." Gas from the Leviathan reservoir is scheduled to begin flowing before the end of 2019.
During a tour today of the work on the eastern pipeline currently being built by Israel Natural Gas Lines, with the participation of Minister of National Infrastructure, Energy, and Water Resources Yuval Steinitz, Ministry of National Infrastructure, Energy, and Water Resources director general Shaul Meridor, Israel Natural Gas Authority acting director general Alexander Warshawsky, and Israel Natural Gas Lines directors, Israel Natural Gas Lines presented the progress made in construction of the pipelines to Jordan, as well as the plan to establish a marine installation for high-speed transmission of gas from new gas fields and a plan for underground natural gas storage.
As reported exclusively by "Globes" in November 2015, Israeli Natural Gas Lines is considering storage of natural gas in the Dead Sea at an estimated cost of $200 million. The natural gas stored in the reservoir can supply Israel's gas needs for 10 days.
Tordjman said today, "Israel Natural Gas Lines is investing all the necessary resources to prepare for a constantly increasing demand for natural gas, and in the readiness of the national system to handle the gas from the Leviathan reservoir. 2016 is presenting us with many challenges, and we are continuing to build new gas lines during this period. We plan to double the existing lines and connect new customers all over Israel."
Steinitz said, "We are already beginning now to invest in a pipeline to export gas to Jordan, so that gas can be exported to Jordan from both Tamar and Leviathan on the shortest possible timetable."
Meridor said, "For the Ministry of National Infrastructure, Energy, and Water Resources, developing a transmission system is one of the most important matters, and the decisions about where to send the natural gas and how to promote the connecting of industry and consumers to natural gas are on our agenda. Israel Natural Gas Lines is an example of a company whose good relations with the party supervising it are leading to good results for the sector, which is successfully progressing and developing."
Published by Globes [online], Israel business news - www.globes-online.com - on March 10, 2016
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