The Parliament of Iraq Endorses the Basra-Aqaba Pipeline Project
The Iraqi Parliament endorsed the project of a 1,680 kilometers pipeline from Iraq’s southern oil producing region to Jordan’s port city of Aqaba. The pipeline, expected to be operational by 2018, is of extreme importance to the Iraqis keen to diversify their export routes. It will also tremendously benefit Jordan who is in serious need of energy. The USD 18 billion dollar pipeline will pump one million barrels of oil a day from Basra Aqaba Port, and around 258 million cubic feet of gas. Jordan will use approximately 100 million cubic feet of natural gas and the excess will be exported through Aqaba generating an estimated $3 billion a year in transit fees for Jordan. Iraq's production of oil is expected to reach 4.9 million barrels per day in 2015 and 9 million barrels per day in 2020, according to Amir.
Jordan’s energy crisis was mainly caused by two energy shocks. The first shock was the US-led invasion of Iraq in 2003. Until then, and since 1985, Jordan was receiving free oil from Iraq through barter agreements. Jordan also had an agreement with Egypt signed in 2001 and according to which Egypt would supply the Kingdom with 3 bcm of natural gas - enough to satisfy 80% of the country’s domestic needs - at a price indexed to oil prices, with a floor and a ceiling. Like Israel, Jordan remained highly depended on Egyptian gas until 2011. The Arab Gas Pipeline transporting Egyptian gas to Jordan was attacked several times by acts of sabotage in the aftermath of the Arab Spring exposing the country once again to its energy vulnerability. The disruption in the flow of gas forced the country to import expensive fuel products for electricity generation causing the total energy bill to jump by at least 60% according to Alaa Batayneh, previous minister of energy to the Kingdom. The Syrian immigration to Jordan is furthermore aggravating to energy crisis in the Kingdom, leading Jordan to adopt various measures to solve its energy problems by improving energy efficiency, developing indigenous resources and diversifying the sources of supply.
The Iraqi-Jordanian pipeline falls within the third category of efforts, the diversification initiative taken by the Hashemite Kingdom. Jordan’s strategy to diversify its sources of supply has also led to talks with Noble Energy, the Texas-based company, over the purchase of natural gas from Israel’s Tamar field. The USD 500 million deal states that Noble will supply Arab Potash and Jordan Bromine with 66 bcf of natural gas over 15 years from Israel 10 Tcf Tamar field that came online in March 2013.
Karen Ayat is an analyst focused on energy geopolitics. Email Karen on ayat_karen@hotmail.com. Follow her on Twitter: @karenayat