The Iraqi-Jordanian Pipeline Could Contribute in Solving the Kingdom's Energy Crisis
Amman and Baghdad have signed an agreement to construct a 1,680 km pipeline that will run from Iraq’s southern oil-producing region, Basra, to Anbar province and then to Jordan’s port city of Aqaba. The USD 18 billion costing pipeline will supply Jordan with 850,000 barrels of oil as well as 3.53 billion cubic feet of gas a day and is expected to be fully operational by 2017. The project is expected to satisfy the Kingdom’s energy needs and to boost its economy through job creation and revenue generation. Jordan, historically considered energy-poor, imports 97% of its energy. Egyptian gas, supplied to the kingdom via the Arab Gas Pipeline, constituted 80% of the Kingdom’s total imports. Repeated damaged to the pipeline following the Arab Spring prompted an increase in imports of expensive fuel products for electricity generation.The energy bill jumped to USD 5 billion this year (equivalent to 15% of Jordan’s GDP) which will result in a rise in electricity prices expected in June this year that will no doubt create a sentiment of general unrest in the Kingdom. Jordan witnessed street protests last November over austerity measures imposed as a condition for a $2 billion IMF loan. The Iraqi-Jordanian pipeline is one of the many medium/long term projects aimed at reducing Jordan’s dependence on imports. Jordan has in the meantime taken short term measures tackling the demand rather than the supply such as introducing energy-saving light bulbs in public buildings and planning to distribute 1.5 million of those bulbs to households saving a total of USD 1 billion.
Oil Shale
The Iraqi-Jordanian deal is not the only initiative undertaken by Jordan to solve its energy crisis. The Kingdom could be home to huge reserves of oil shale. In 2009, the Government of Jordan (GOJ) has signed an agreement with Shell International through its local branch, Jordan Oil Shale Company (JOSCO), in which GOJ has given JOSCO the concession to explore oil from oil shale within a predetermined land space in an attempt to realise Jordan’s master plan: energy self-sufficiency. Shell invested USD 100 million to explore for oil shale in Jordan’s east and north. If the seismic studies are confirmed, the Kingdom could become a net gas exporter by 2020 producing between 300 million and 1 billion cubic feet of gas per day.
Nuclear Reactors
Additionally, Jordan’s energy dependence and current crisis drove controversial nuclear efforts. Jordan is close to commissioning two 1GW nuclear reactors 100 km south the Syrian border by either a Russian or French-Japanese consortium at a cost of EUR 12 billion, said Khaled Toukan, chairman of the Jordan Atomic Energy Commission. The source of the funding remains unclear, but an aid package from the UAE is one of the speculations.
Israeli gas
The Israeli cabinet has not yet decided on its gas export policy: how much gas it will export, to which markets and via which routes. Exporting gas to Jordan would be a non mutually exclusive option and a rather simple and low cost endeavour for Israel and could supply the kingdom with much-needed gas while its other projects remain on progress.
Karen Ayat is an analyst focused on energy geopolitics in the Eastern Mediterranean.
Follow Karen on Twitter: @karenayat