Tapping Gaza’s Gas

Finally taking the lead and thinking ahead to solve its energy issues, the Jordanian government is taking a stab at Gaza and Cyprus’s offshore gas reserves.

Minister of Energy and Mineral Resources Mohammad Hamed said the agreement, which is yet to be signed with the Palestinian authorities, means that Jordan can import gas from Gaza’s offshore gas field, which was discovered in 1998 and will be developed by British Gas Group and Consolidated Contractors Company.

Hamed said half of the total gas reserves extracted daily will be consumed in Gaza, while the other half—roughly 150 to 180 million cubic feet—will start being exported to Jordan at the end of 2017. “Israeli consent is not required,” asserted Hamed, because the field lies in Palestinian waters.

The Jordanian government is also eyeing Cypriot natural gas so as to avoid repeating past mistakes of relying on one source, like the Egyptian gas, which has seen continuous disruptions during the past three years. “It is crucial that we are ahead of others because European countries are very interested in any gas quantities located in southern and eastern parts of the Mediterranean. They want the whole quantity, so it is crucial that we think strategically and sign these MoUs,” explained Hamed.

He said this was a small part of a comprehensive plan to secure Jordan’s base load by diversifying its energy sources away from expensive heavy fuel in generating electricity. In 2009, 85 percent of electricity was generated using Egyptian gas. Following the handover of political power there, Jordan began replacing gas, which is the cheapest product used to generate electricity, with expensive fuel, causing the Kingdom’s energy bill to skyrocket.

The government is also constructing an LNG facility in Aqaba, which is scheduled to come on line early next year. Shell was chosen to import around 150 million cubic feet of LNG per day, around 30 percent of Jordan’s needs. Although the price will be based on international prices, it will still be 30 percent cheaper than heavy fuel, said Hamed.

These gas projects, coupled with renewable energy, will all hopefully result in cheaper electricity. Despite that, electricity tariffs for the mid and higher segments of consumers will continue to rise at the beginning of each of the upcoming three years, to pull the brake on NEPCO’s continuous losses.