Proposed Gas Deal Between Jordan & Israel
Fact Sheet
Jordan’s intended deal to import gas from the leviathan
The Letter of Intent (LOI): On September 3rd, 2014, media disclosed the signing of a ‘non-binding’ Letter of Intent between Jordan’s National Electric Company, NEPCO, and Noble Energy, a Houston-based company, to import natural gas from the Israeli-controlled East Mediterranean Leviathan field, paving the way for the signing of an agreement. Noble Energy had announced earlier that this deal was in coordination and support of the United States Department of State.
Status: Although the LOI stated that a final agreement is expected before the end of 2014, however it has not been concluded to date, partly due to escalating local opposition to it, and to the regulatory obstacles by the anti-trust commission on the Israeli side.
Preceding energy deals with Israel: Two prior agreements had been concluded in 2014 between a subsidiary of Noble Energy and the Arab Potash Company and the Jordan Bromine Company to import natural gas from the Tamar field, offshore Haifa. The agreement is for an initial term of 15 years and a total gross contract quantity of around 66 billion cubic feet of natural gas. Gross revenues are estimated at $500 million, with actual sales dependent on final purchased quantities and oil prices at the time of sale. Noble Energy represents 36% of the Tamar field, with the remaining interest owners being Israeli companies.
How much, how long, and for what purpose: This proposed deal will see Jordan importing a base[1] gross quantity of 1.6 trillion cubic feet (45 billion cubic meters) of natural gas from the Leviathan field in the Israeli-controlled east Mediterranean by the end of 2017 over a 15 year term, and for the amount of USD 15 billion[2] for the purpose of electricity generation. As a result of the regulatory approval delays by Israelis, it is not expected that the field will be ready for export prior to 2019.
The Official Jordanian Position: Official statements and justifications by Government of Jordan were (1) it was signing with an American company to import gas from the Mediterranean; (2) there were no other alternatives to solve Jordan’s energy crisis due to the disruption of the Egypt gas pipeline and Jordan’s subsequent dependency on diesel to generate electricity; (3) this deal will save Jordan USD 988 million/year.
Who in fact are the signatories? Jordan’s National Electric Company (NEPCO) is wholly owned by the government, whereas Houston-based Noble Energy constitutes a minority partner in the predominantly Israeli consortium made up of Delek Drilling (controlled by Yitzhak Tshuva), its subsidiary Avner Oil Exploration, and Ratio Oil Exploration.
Availability of Alternatives to Jordan’s Energy Crisis: A number of alternatives are available as immediate and mid-term solutions that to avoid the energy crisis, as had been documented in Jordan’s National Energy Strategy 2007-2020. The gas from the Leviathan does not pose an immediate solution as it cannot arrive prior to 2018 at minimum, whereby other solutions will, and should, be in place.
1) Liquefied Natural Gas (LNG): The Aqaba LNG Terminal is due to be complete in quarter 2 of 2015, allowing Jordan to purchase liquefied gas from the international market.
2) Oil Shale: Jordan has the 4th largest oil shale reservoir. An agreement has finally been signed (despite years of attempted development of this resource) for power generation from oil shale, and electricity generation is scheduled to start for local consumption in the second half of 2018 as phase 1 of a longer term project. The oil shale fired power plant is expected to reduce the Kingdom’s expenditure on energy imports by more than JD 350 million per year, in addition to creating 3,500 jobs during construction and 1,000 jobs during operations[3].
3) Renewable Energy: The national strategy set a target for renewable energy of 10% of the energy mix by 2020. In spite of high interest by investors due to Jordan’s high potential in solar and wind energy, progress by the Government has been debilitating.
4) Energy Conservation Strategies and Measures: Enacting a firm set of measures to address conservation of energy at both the demand and supply side. A Jordanian electricity distribution company recorded electrical losses of 17% for 2013, whereas accepted international range is 5-6%.
5) Public transportation system: Through investing in and enhancing Jordan’s inefficient public transportation system, energy imports can significantly decrease, reducing the trade deficit.
6) Seeking regional countries to for oil & gas imports: Kuwait and Egypt have announced over the past 2 months that they will be importing natural gas from Iraq and Algeria, respectively. As announced by a spokesperson for the Energy Committee of the Lower House of Representatives, the Qatari Embassy confirmed they have not been approached by Jordanian officials as of 2012 for any price negotiations to export gas to Jordan.
Savings to Jordan? A skewed way of calculating: The savings announced by the Jordanian Government were calculated based on oil prices at the time of announcement, and on the faulty assumption that there would be no energy mix by the time the gas would be imported from the Leviathan in 2018. Oil prices have significantly dropped, and additionally, by 2018 NEPCO’s energy mix will include other power sources such as oil shale, Aqaba LNG terminal, renewable energy projects. Jordan can create savings through investing in its resources that can provide long term sustainability in its energy sources.
What are the repercussions of this deal-to-be:
Geopolitical: By signing this agreement, Jordan and Egypt would cement Israel as the upcoming energy power in this region, tilting the scale of powers for the entire region. Jordan’s LOI is highly significant for Israeli interests, as it represents an anchor (collateral) for their $6.5 bn Leviathan project as announced by the consortium, in order for phase 2 of the Leviathan field’s development to continue.
Jordanian households directly contributing to Israel’s war machinery: the share of the Zionist government from this deal being paid for by the Jordanian government (through funds paid by the citizens for their electricity bills) will be at least 8.4 billion dollars. Consequently, this money will be used to fund the Zionist war machine and aggression, while also funding the expansion of illegal settlements and enhancing the Zionist economy. The amount that will be channeled back to the Israeli government is the equivalent of slightly more than the cost of three future wars against Gaza ( the last war waged by Israel which cost 2.52 billion dollars.[4]
Strategic long-term sub-ordination of Jordan’s economy to Israel -more so in view of the ultra right parties emerging- in the domain of energy while connecting the citizens’ interests (i.e. electricity) directly to the enemy.
Widespread Popular Opposition to the deal.
Since the signature of the Letter of Intent, the Jordanian civil society organized against the finalization of the deal. Most of the Jordanian political parties announced their position against the deal and later joined the “National Committee to Prevent the Signature of the Gas Deal”. Also in November and December, the Jordanian parliament took some steps to hold the government accountable and represent the majority’s voice against the deal. Their action resulted with a 2 day general hearing with the government that resulted with a recommendation to the government not to proceed with the deal. Majority of the parliament voted in favour of this recommendation. During the past months, a series of demonstrations and protests took place in different cities in Jordan and in university campuses to express the rejection of the people to become financiers of the Israeli occupation through payment of their electricity bills.
[1] This is the base minimum to which Jordan is committed to, regardless of availability of other deals over the next 15 years.
[2] Noble Energy announcement of NEPCO Letter of Intent, September 3, 2014
[3]https://www.enefit.jo/en/news/-/news/2014/10/22/enefit-jordan-mediacoverage-02102014#2014/9
[4] The Israel-Jordan Natural Gas Deal: Pumping Revenue into Israel’s Coffers, Mika Minio-Paluello of Platform. Published in partnership with the Jordanian Coordination Committee Against Importing Gas from Israel
