Diplomacy

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Israeli Natural Gas to Save Jordan $1.5 Billion a Year

Importing Israeli gas will save Jordan $1.5 billion a year according to a report published yesterday on the Israeli financial website Globes.

Last September, Jordanian power company Nepco signed a letter of intent with Noble Energy, which operates the Leviathan reservoir. The agreement is for 15 years, during which the partners in Leviathan will supply 3-4 BCM annually, amounting to 45 BCM over the contract period. The value of the deal is estimated at $15 billion.

From a technical standpoint, exporting gas to Jordan is the cheapest and quickest option, because the land-based gas pipeline that must be constructed for it is only a few kilometers long. The deal is also economically worthwhile for both sides. Jordan currently imports 97% of its energy, paying at least double what it would pay for Israeli gas. Estimates are that the Jordanian economy will save $1.5 billion a year by switching the purchase of Israeli gas. For their part, the Israeli gas partners will receive a higher price for the gas than they would have received in Israel.

Globes reported that Jordan’s energy minister defended the deal before Jordan’s parliament saying, “the purchase of gas from Noble Energy does not constitute a political risk for Jordan, and will not make it dependent on the goodwill of a single country. … We can’t sit and do nothing when our power company is losing more and more money each year.” The article further reports that over the course of the fifteen to twenty year deal, “both parties realize that there will be ups and downs in the relations between the two countries.”

Jordan turned to Israel to supply its natural gas as instability last year in the Sinai led to regular sabotage of Egypt’s natural gas pipeline to Jordan.

[Photo: PBS NewsHour / YouTube ]