Jordan has signed a $2.2 billion build-operate-transfer deal with a consortium led by Estonia’s Enefit to have the Kingdom’s first oil shale power plant up and running by the end of 2018.
Construction of the 470-megawatt plant, which is expected to provide 20 percent of Jordan’s annual energy needs, will start within a year.
The project comes as part of Jordan’s efforts to reduce energy imports to 60 percent from 97 percent by 2020. “This is a clear message from Jordan’s government reaffirming its commitment to a diversified energy mix strategy entailing oil shale, natural gas, renewable, and nuclear energy,” Minister of Energy Mohammad Hamed told reporters during a news conference following the signing of the 30-year agreement.
The project is estimated to cut the country’s energy bill by about $500 million a year, as the electricity produced will be bought at half the current market price, according to officials.
Located at Attarat um Ghudran, south of Amman, the plant will create 3,000 jobs during the construction phase and 700 jobs for ongoing operations, Hamed said.
Jordan’s Natural Resource Authority estimates the Kingdom has up to 70 billion tons of commercially viable shale oil, which make it the fourth largest hub for oil shale in the world.
The disruption of Egyptian gas flows, which generated 80 percent of Jordan’s electricity in the past, has created an urge for Jordan to invest in alternative energy projects to quell the growing pressure on the country’s budget that officials have called unsustainable.
The General Director of the National Electric Power Company (NEPCO) Abde al-Fattah al-Daradkeh told reporters at the deal signing that the power plant will be the world’s largest oil shale field power plant after Narva in Estonia. It will consume about 10 million tons of oil shale per year and will pay the government a royalty of $2.11 for each ton, amounting to around $21 million annually.
Depending on how well matters with the plant pan out, then the construction of a second 900 Megawatt facility will be slated for construction by the end of the decade, Fattah added.
Andres Anijalg, Jordan Development Projects director at ENEFIT, said Jordan could learn a great deal from Estonia in terms of how to achieve energy independence. “Estonia’s energy sector was also import-reliant but starting the oil shale business at the beginning of last century led us to reach energy self-sufficiency and begin exporting electricity out of the country. I think Jordan will have the same perspective.”
The Attarat power plant will sell electricity to the government at a levelized price of around $0.107/kWh, which is far cheaper than the current costs of using diesel and heavy fuel to produce electricity at around $0.21/kWh. Loans from the Bank of China and the Industrial and Commercial Bank of China, along with support from China Export and Credit Insurance Corp., will be used to finance the plant, Anijalg said, adding that discussions with other international banks were underway, followed by agreements with local banks to rake in more funds for the project.
