Jordan to buy gas from Gaza starting 2017 — minister

AMMAN — Jordan will import about one-third of its needs of natural gas from Gaza Strips’ offshore gas fields at the end of 2017, Minister of Energy and Mineral Resources Mohammad Hamed said Saturday.

In October, the National Electric Power Company (NEPCO) will sign a letter of intent with British Gas Group, which has concession rights to explore for gas offshore Gaza Strip, to import natural gas, the minister told The Jordan Times in an interview.

NEPCO will import 150-180 million cubic feet per day of natural gas from fields the company is developing offshore Gaza Strip, said the minister.

“During the first quarter of 2015, NEPCO will sign the agreement to purchase gas from British Gas Group.” 

Natural gas will be supplied to Jordan through the Arab Gas Pipeline, which is a natural gas pipeline that stretches from Egypt into Jordan and other neighbouring countries, Hamed noted.

“The amount of gas NECPO will import will cover about 30 per cent of the country’s daily needs of natural gas for power generation,” he added. 

Jordan consumes about 500 million cubic feet of natural gas per day for production of electricity, the minister said.

“The agreement with British Gas will be the first in the region. It will greatly help reduce the losses of NEPCO amidst rising costs of energy production.” 

NEPCO was forced to purchase more expensive heavy fuel and diesel for power production following repeated cuts in natural gas supplies from Egypt blamed on terrorist attacks on the pipeline. The last cut in supplies was January this year, said the minister.

The company’s losses reached JD1.085 billion to date and are expected to reach JD1.3 billion by the end of this year.

“The agreement between NEPCO and British Gas Group is part of the government’s efforts to diversify energy resources and reduce burden on the state budget,” he said.

The government is also willing to look into requests by other companies to import gas from British Gas and will allow them to import gas from these fields, he added.

“We are keen on reducing costs and are also going ahead with other projects such as the liquefied natural gas terminal to meet the energy challenge,” said the minister.

When asked about the price of Gazan gas, Hamed said: “The price of the gas will be similar to the price of gas the Arab Potash Company will buy from Israel under a deal it signed earlier this year.”

In February, the Arab Potash Company signed a $771 million agreement with US-based Noble Energy under which the latter will provide the company with 66 billion cubic metres of natural gas over a period of 15 years. The Financial Times reported that Noble Energy will sell the gas based on a price of at least $6.5 per thousand cubic feet, with upside linked to Brent crude oil prices.

British Gas Group and its partner, the Athens-based Consolidated Contractors International Company, owned by Lebanon’s Sabbagh and Khoury families, were granted oil and gas exploration rights in a 25-year agreement signed in November 1999 with the Palestinian Authority.

Jordan imports about 96 per cent of its annual energy needs at a total cost of 20 per cent of the gross domestic product.