Cyprus Eyes Jordanian Market
Noble Energy, Inc. announced on 3 September the execution of a non-binding Letter of Intent (LOI) to supply natural gas from the Leviathan field, offshore Israel, to the National Electric Power Company Ltd. (NEPCO) of Jordan. Under terms of the LOI, Noble Energy and the Leviathan partners will supply a base gross quantity of 1.6 trillion cubic feet (Tcf) of natural gas from the Leviathan field over a 15-year term. Sales volumes under the agreement are anticipated to begin at a rate of 300 million cubic feet per day. Delivery will occur via pipeline. The price for the natural gas is still to be determined and will be linked to Brent oil prices. The deal, expected to be signed in 2014, still needs regulatory approval from both Jordan and Israel. Noble Energy operates the Leviathan field with a 39.66 percent working interest. Delek Drilling, Avner Oil Exploration and Ratio Oil Exploration (1992) Limited Partnership hold respectively 39.66, 22.67 and 15 percent interest.
The non binding agreement received the support of the United States Department of State. Israeli officials commented on the talks saying that they mark the beginning of an energy collaboration between the two countries and that they will bring economic prosperity to the parties. Jordanian officials stressed on the fact the deal discussed involves a Texan company and the National Electric Power Company, dismissing the fact it is in fact an agreement between Israel and the Kingdom.
One week after the announcement of the deal planned between Israel and Jordan, the Minister of Energy and Water of the Republic of Cyprus Yiorgos Lakkotrypis announced his visit to Jordan where he met with several high level officials, including Jordan’s Minister of Energy and Mineral Resources Mohammad Hamed with whom he discussed energy matters. Cyprus and Jordan signed a Memorandum of Understanding for the countries to cooperate in the fields of renewable and natural gas. During his meeting with the Jordan Prime Minister Abdullah Ensour, Lakkotrypis stressed on the readiness of Cyprus to supply Jordan with natural gas and on the role of the two countries in enhancing the stability of the region.
Whilst Jordan is looking to achieve energy security by multiplying efforts to develop indigenous resources and diversify its sources of supply, Cyprus is looking for ways to export its current and future natural gas. An onshore LNG terminal remains the top priority for the island as it would give it the flexibility reach further destinations. Cyprus is hoping that the exploratory results of ENI/KOGAS and TOTAL will encourage a final investment decision for the construction of the facility. The Aphrodite field discovered by Noble Energy in 2011 was estimated at 3.6 to 6 Tcf of natural gas, not enough to move forward with the project. Cyprus, through its interest in Jordan, revealed a regional demand for natural gas that Cyprus plans to exploit. Cyprus had also discussed other options including piping the gas to Egypt's Idku facility for export.
Karen Ayat is an analyst and Associate Partner at Natural Gas Europe focused on energy geopolitics. She holds an LLM in Commercial Law from City University London and a Bachelor of Laws from Université Saint Joseph in Beirut. Email Karen karen@minoils.com Follow her on Twitter: @karenayat