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Egypt to supply Kingdom with half of its gas needs this year

'Resumption of export to alleviate budget strain'

By JT - Jan 13,2019 - Last updated at Jan 13,2019

AMMAN — Jordan and Egypt on Sunday signed agreements under which the Kingdom will be provided with half of its needs of natural gas to generate electricity for 2019.

National Electric Power Company (NEPCO) Director General Amjad Rawashdeh, Egyptian Natural Gas Holding Company (EGAS) Director General Osamah Baqli and the Jordanian-Egyptian FAJR for Natural Gas Transmission and Supply Company Director Fuad Rashad signed the agreements in Cairo, an Energy Ministry statement said.

Energy Minister Hala Zawati, who attended the signing ceremony with her Egyptian counterpart Tarek El Molla, said that the deals include amendments to previous accords between the two countries regarding the purchase and sale of natural gas.

Under the agreements, Zawati added, Egypt will export to the Kingdom 50 per cent of its needs of natural gas during 2019, noting that the remaining quantity will be covered by Shell, the company which provides Jordan with liquefied gas through the Aqaba Port, and from local renewable resources.

The minister commended Egypt’s response to the Jordanian amendments to the deals, which should boost the Kingdom’s benefits from Egyptian natural gas.

She also highlighted the importance of the agreements in enhancing the stability of the power grid and guaranteeing the provision of electric power at lower rates as natural gas is cheaper than its lique fied form. 

Zawati underscored the significance of the resumption of the Egyptian natural gas supply in reducing the cost of the power bill, which has been weighing on the Kingdom’s budget for a long time, noting the impact of such a move on reducing power costs for citizens as well. 

On the pricing of the commodity, she said that the agreements linked the price with the rates of the Brent oil as an index.

Regarding the fact that the deals cover 2019 only, the minister said that the Egyptian side will have a clearer measure of their production and reserve indicators by the end of the year, noting that Cairo also has other commitments regarding its natural gas. 

Zawati and Molla discussed means of enhancing energy cooperation, especially on natural gas grids for industries, which are currently implemented through FAJR, and also went over cooperation in the mineral resources field.

Jordan and Egypt in August signed agreements on the sale and purchase of natural gas, under which Amman will import from Cairo 10 per cent of its needs of natural gas to generate electricity. 

At the time, Zawati said that both sides signed amendments to 2004 agreements, which included gas amounts that had not been provided to Jordan.

Egypt provided Jordan with 250 million cubic feet of natural gas daily since 2004, but these amounts started decreasing at the end of 2009 until they were completely halted in 2011 after some 25 sabotage attacks on the Arab Gas Pipeline.

Such conditions resulted in cumulative losses of the government-owned NEPCO of around JD5 billion, according to ministry figures. The Kingdom’s daily needs of natural gas for electricity generation stand at 330 million cubic feet.

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