Jordan Turns to Nuclear to Make up for Natural Gas Shortfall
Russia will build Jordan’s first two nuclear reactors in a bid to produce atomic energy by 2020. The Hashemite Kingdom’s government has announced that it has selected Russian state-owned firm Rosatom to construct two 1,000-megawatt (MW) nuclear power plants 60 kilometres northeast of Amman, at the edge of the northern desert, 30 kilometers away from the nearest residential area.
Rosatom and the Jordanian government have now reached the second stage of negotiations. A final agreement is expected by 2015.The project will secure the country’s energy future, said Dr Khaled Toukan, Chairman of Jordan’s Atomic Energy Commission. Prices of electricity will also be reduced. Rosatom will cover 49% of the $10 billion construction and operation costs on a build-own-operate basis. The government will secure the remaining 51% through public and private investment and maintain the majority of the shares.
Jordan has launched various initiatives in an attempt to put an end to the severe energy crisis is it currently going through. Oil shale, natural gas, renewables and LNG projects are ongoing. Dr Toukan believes that nuclear will compete with other sources of energy in terms of achieving low electricity prices. The government is currently forced to import expensive diesel and heavy fuel products to make up for the shortfall caused by the disruption in the flow of natural gas from Egypt since the 2011 uprising that toppled president Mubarak from office. The country relies heavily on imported energy importing 97% of its needs at a cost of one fifth of its GDP. The quantities of natural gas currently received from Egypt do not exceed the 50 million cubic feet (mcf) per day - despite the 240 mcf stipulated in a joint agreement between Amman and Cairo.
Jordan can no longer rely on foreign supply. Egypt has breached its agreement blaming the shortfall on technical problems in the pipeline. The lack of natural gas has caused Jordan’s energy bill to hit a shocking $2 billion by the end of the year. Earlier this month, the Egyptian Natural Gas Holding Company (EGAS) has expressed its intention to compensate Jordan for the suspension of natural gas once it starts producing a surplus. However, Egypt has its own energy problems given that it is not producing enough natural gas to satisfy its local demand. The country produces 5.7 billion cubic feet of natural gas per day, while it consumes 6.2 billion cubic feet.
Neighbouring Israel has ambitions of its own, as it has repeatedly expressed its intention to export natural gas to Jordan. Such a move, even if temporary, is considered with apprehension by the Kingdom. Energy security is therefore at the core of Jordan’s priorities. The country not only aims to develop its indigenous resources but intends to achieve a balanced energy portfolio, namely by increasing the use of renewables and taking advantage of the large solar power potential (315 days of sun per year) and the speed of wind (7 to 9 meters per second). Other major game changers for Jordan would be the realisation of the oil shale project led by Estonia’s Enefit to finance, construct and operate a 430 megawatt oil shale fuel power station by the end of 2016. Other companies such as Royal Dutch Shell and BP have invested respectively $100 and $260 million in oil shale and natural gas explorations in the country. Jordan’s numerous and simultaneous efforts could bring the country out of its burdening energy handicap. By reducing its energy bill, Jordan will be able to improve its balance of payments, enhance its fiscal position, reduce the price of electricity and achieve energy security.
Karen Ayat is an analyst focused on energy geopolitics in the Eastern Mediterranean. Email Karen on ayat_karen@hotmail.com. Follow her on Twitter: @karenayat