‘Smaller industries need support to benefit from natural gas deal’

AMMAN — Jordan’s recent agreement to supply the industrial sector with liquefied natural gas (LNG) will benefit the Kingdom’s largest industries, but smaller companies will need help to adapt, according to a sector representative. 

Around 96 per cent of Jordan’s industries can be classified as small to medium, according to Ziad Homsi, the chairman of the Amman Chamber of Industry. 

These industries, according to Homsi, will need government support or an agreement between each other to build the necessary infrastructure to receive the natural gas, which is to be provided under a recent deal between the National Electric Power Company (NEPCO) and the Jordanian-Egyptian FAJR for Natural Gas Transmission and Supply Company.

Energy is a major challenge facing the Kingdom’s industries, according to a written summary of the agreement provided by Homsi.

The industrial sector constitutes 25 per cent of total electricity consumption and 20 per cent of total local energy consumption in Jordan, the summary states. 

The NEPCO-FAJR agreement, which will provide 70 million cubic feet of LNG to the sector, is expected to save industries around 20 per cent of their total energy bill. 

The deal, signed earlier this month, is also expected to reduce emissions from heavy oil fuels and enhance the viability and competitiveness of Jordanian industry, Homsi said.

But the industries that stand to gain most from LNG are the country’s largest, which have the means to build infrastructure to utilise it. 

The Amman Chamber of Industry recently conducted a survey of 14 “energy-intensive factories” to gauge the sector’s readiness for a shift to LNG, according to the agreement summary. 

Out of the 14 surveyed, 11 factories have infrastructure ready to receive gas and use it, while the remaining three are willing to establish that infrastructure.

NEPCO will use Sheikh Sabah Al Ahmad LNG Port in Aqaba to import the natural gas, using a major gas pipeline stretching from the country’s south to its north. Industries seeking to use the gas will have to build pipelines themselves to connect their factories to the main line. 

While larger companies may be able to afford building pipelines, the majority of industries are small- and medium-sized and must not be forgotten, Homsi stressed. 

They will need support to adapt to the shift and build the necessary infrastructure to benefit from the LNG agreement at all, he said. 

The industries that may struggle with these costs will also have the price of the natural gas itself to contend with. 

It is not a fixed price, Homsi pointed out. Instead, as with other fuel products, the price of the gas will be set monthly. If the LNG costs more than heavy fuels like oil, smaller industries may opt not to use it altogether.

The agreement summary also states that “there is no evaluation specifying the needs of the whole industrial sector to see whether the contractual quantities are insufficient”, referring to the 70 million cubic feet agreed upon. 

If enough industries are able to shift to LNG, the amount may need to be increased to keep up with demand.

“In my personal opinion, it is not enough,” Homsi said. “But there is potential for expansion.”