Cyprus and Jordan in Cooperation on Natural Gas Trade
A new energy alliance is germinating in the Eastern Mediterranean and its two protagonists are Cyprus and Jordan, the first one a prospective natural gas producer and the second one a natural gas customer. Yesterday (Tuesday), Giorgos Lakkotrypis, Cyprus Energy Minister and Ibrahim Saif, the Jordanian Energy Minister, met in Nicosia and announced the establishment of a technical committee to discuss options for cooperation in the gas sector.
Since 2011, Jordan has suffered from natural gas shortages due to terror attacks that damaged the pipeline that transmitted gas from Egypt to Jordan through Sinai. Following those incidents, gas supply from Egypt was halted and, for a few years, Jordan's power generation was based on expensive and emissions-rich oil.
This year Jordan started importing LNG cargoes from Qatar through Shell. An FSRU ship is anchored near Aqaba port in the Red Sea and convert the LNG into gas that is then transmitted through a pipeline to various customers, mainly for power generation.
According to the Cyprus Mail, the ministers haven't ruled out a cooperation between Cyprus, Jordan and Greece with the possibility of adding Egypt to the mix.
In 2011 Noble Energy, the American E&P energy company, and Delek Group, the Israeli business group, discovered a 4.5 trillion cubic feet (tcf) natural gas field offshore Cyprus, Aphrodite. Since then, not much has changed and the gas field is still awaiting development.
The two energy ministers discussed options to transmit that gas from Cyprus to Jordan through Egypt either by pipeline or as LNG, though the second option seems less viable because of the short distance from the Egyptian shore to Jordan. Israel, which could be viewed as a natural transit country, wasn't mentioned, according to the report.
"About 97% of the energy needs in Jordan is imported and we regard Cyprus as a strategic partner in terms of the potential cooperation between both countries," said Mr. Saif. "We are really here to explore long-term cooperation."
Earlier this year Jordan was supposed to sign a $15-billion contract with the Leviathan Partnership in what was supposed to be one of the project's anchor contracts. The contract signing ceremony was planned to take place at the White House last January; it was cancelled due the regulatory problems that had arisen in Israel. It is still not clear whether Jordan is still committed to the agreement, which was achieved with the support and the mediation of the U.S. State Department but was opposed by the Jordanian public opinion.
Developing Aphrodite efficiently will demand cooperation between Cyprus and Israel, in order to reach a unitisation agreement, so the development will be carried out in coordination between Leviathan and Aphrodite. Those two fields are close to each other and are under the same ownership of Noble Energy and Delek Group, a situation that should ease commercial negotiations. When political issues between Cyprus and Israel are resolved and commercial terms are concluded, it will be logical and more secure to transmit Cypriot gas to Jordan through Israel. However public opinion in Jordan largely opposes contact with Israel--likely even if only as a transit territory for gas purchased from Cyprus.
Next year the Tamar partners are supposed to start delivering natural gas to Arab Potash Company, a Jordanian company, based east of the Dead Sea, in a relatively small contract of 1.8 billion cubic metres in 15 years and worth $500-$700 million.