http://almashareq.com/en_GB/articles/cnmi_am/features/2019/02/05/feature-02

Economy |

2019-02-05

Egypt resumes natural gas exports to Jordan


Jordanian and Egyptian officials gather on January 13th to sign an agreement to export natural gas to the kingdom in 2019. [Photo courtesy of the Jordanian Ministry of Energy]
Jordanian and Egyptian officials gather on January 13th to sign an agreement to export natural gas to the kingdom in 2019. [Photo courtesy of the Jordanian Ministry of Energy]

Egypt began supplying Jordan with half of its daily needs for liquefied natural gas (LNG) after an agreement signed between the two countries in mid-January came into effect.

The kingdom needs an estimated 330 million cubic feet per day of LNG for electricity generation.

Under the January 13th agreement, Egypt will export about half the amount of LNG needed to power Jordan's electrical grid in 2019, Jordanian Minister of Energy and Mineral Resources Hala Zawati said in a statement.

She stressed the importance of the agreement in enhancing the stability of the kingdom's electricity system and safeguarding the security of its power supply.

The resumption of the supply of LNG from Egypt will reduce Jordan's energy bill, "which has long been a strain on the budget of the kingdom", she said, noting the impact of liquefied natural gas on reducing the cost of electricity.

The energy co-operation between the two countries also reflects the importance of Arab co-operation in this vital sector and other sectors that contribute to supporting industry, Zawati said.

Jordanian power plants are supplied with Egyptian LNG through the Arab Gas Pipeline, which extends from south al-Arish in Sinai to Jordanian territory.

Starting in 2004, Egypt provided Jordan with a daily 250 million cubic feet of LNG. This amount began to drop at the end of 2009, and was halted in 2011 after some 25 sabotage attacks on the Arab Gas Pipeline by militants in Sinai.

After the flow of Egyptian gas stopped, Jordan turned to importing LNG through the Sheikh Sabah gas terminal in Aqaba, which opened in mid-2015.

Boost for industrial sector

The resumption of pumping of Egyptian gas after a years-long halt "is positive news for the Jordanian economy, which is facing many challenges", political economy expert Zayyan Zawaneh told Al-Mashareq.

"Egyptian gas costs less than that imported from other markets," he explained, noting that the resumption of Egyptian gas pumping will help the industrial and commercial sectors, "as it reduces production costs for Jordanian factories".

This will in turn increase the competitiveness of Jordanian goods and products in regional markets, Zawaneh said.

The cost of energy is a key concern for the industrial sector, which has come under pressure already as a result of the extended closures of Jordan's borders with Syria and Iraq, both of which have been reopened.

"The news is positive and boosts Jordan’s competitiveness and its ability to attract investment," General Trade Union of Workers in Textile, Garment and Clothing Industries president Fathallah al-Omrani told Al-Mashareq.

"Some factories left Jordan for other countries due to the high cost of energy in the past period," he said, adding that the kingdom also has begun negotiations with Iraq on energy and the import of oil and gas.

"It is imperative to increase Arab-Arab co-operation," he said, and it is in Jordan's interest to support industry, diversify energy sources and strengthen relations with Arab countries in this area.

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