Jordanian Energy Minister defends Israel gas deal

Leviathan

Buying Israeli gas will save the Jordanian economy $1.5 billion a year.

Commenting on Jordan's importing of natural gas from Israel, Jordanian Minister of Energy and Natural Resources Mohammed Hamed said, "The purchase of gas from Noble Energy does not constitute a political risk for Jordan, and will not make it dependent on the goodwill of a single country." He was speaking yesterday in the Jordanian parliament in Amman.

Hamed asserted that signing an agreement to purchase gas from Noble Energy would be relatively advantageous for Jordan, because electricity is currently produced in Jordan using much more expensive fuel. "We can't sit and do nothing when our power company is losing more and more money each year," he said.

Several members of parliament took issue with the minister's remarks, saying Jordan should not sign an agreement to import Israeli gas, thereby encouraging the Israeli economy. The opponents mentioned Israel's opposition to recognition of a Palestinian state, adding that buying Israeli gas would embroil Jordan politically and break the united front against Israel.

Last September, Jordanian power company Nepco signed a letter of intent with Noble Energy, which operates the Leviathan reservoir. The agreement is for 15 years, during which the partners in Leviathan will supply 3-4 BCM annually, amounting to 45 BCM over the contract period. The value of the deal is estimated at $15 billion.

From a technical standpoint, exporting gas to Jordan is the cheapest and quickest option, because the land-based gas pipeline that must be constructed for it is only a few kilometers long. The deal is also economically worthwhile for both sides. Jordan currently imports 97% of its energy, paying at least double what it would pay for Israeli gas. Estimates are that the Jordanian economy will save $1.5 billion a year by switching the purchase of Israeli gas. For their part, the Israeli gas partners will receive a higher price for the gas than they would have received in Israel.

Despite the economic benefits of buying Israeli gas, Jordanian groups have protested in recent weeks against the signing of a final gas agreement. According to energy sector exports, however, despite the tension between Israel and Jordan, deals with Jordan will go through. The sources stated that Jordan needed Israeli gas, and since the deal involved is a long-term one (15-20 years), both parties realize that there will be ups and downs in the relations between the two countries.

Published by Globes [online], Israel business news - www.globes-online.com - on December 10, 2014

© Copyright of Globes Publisher Itonut (1983) Ltd. 2014

5 Comments
View comments in rows
Update by email about comments talkback
POST
Comments
Your name
Please insert your name
Content
Hyperlink in a new window Hyperlink Right Left underline italic bold Bulleted List Ordered List Face1 Face2 Face3 Face4 Face5 Face6
Your comment

Thanks
You comment was recieved and soon will be published.
In posting comments, I agree to abide by the Terms of Use
Globes encourages lively and frank debate, but posts that the editors consider merely abusive or otherwise inappropriate will be removed. Report inappropriate content
Thank you for posting your comment, which will be reviewed for publication.
Loading Comments...load
Load more comments
Twitter Facebook Linkedin RSS Newsletters גלובס Capital  Markets Conference 2017