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    Egypt: We Will Not Halt Gas Supplies to Jordan



Egypt denies gas supply to Jordan will be halted blaming the disruptions on technical difficulties. Israel could be a more reliable supplier of natural gas.

by: Karen Ayat

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Natural Gas & LNG News, News By Country, , Egypt, Jordan, Top Stories, East Med Focus

Egypt: We Will Not Halt Gas Supplies to Jordan

Egyptian Ambassador to Jordan denied on Monday that Egypt will halt natural gas supplies to Jordan despite rumors that Egypt will soon terminate the natural gas deal between the two countries. Gas supply from Egypt to Jordan is completely halted at present. Disruptions in the flow of gas from Egypt to the Hashemite Kingdom started occurring in the aftermath of the Egyptian revolution that toppled President Husni Mubarak in 2011. The severe reduction in the quantities of gas received by Jordan forced the Hashemite Kingdom to import expensive fuel products causing its energy bill to spike, at one point flirting with some JD 4.4 billion (approximately USD 6.2 billion), and the cost of electricity subsidies to exceed JD 1 billion (approximately USD 1.41 billion).

The agreement between Amman and Cairo stipulates that Jordan would receive 240 mcf of natural gas per day. Acts of sabotage to the Arab Gas Pipeline connecting Egypt to Jordan caused the rate to plunge to as low as some 80 mcf a day in 2012, or the third of the rate outlined in the deal. The reasons for the drop given by the Egyptians were all of a technical nature. The impact of the cuts was grave given that Jordan relied on Egyptian natural gas imports to cover almost 80 % of the Kingdom’s electricity generation needs.

Egyptian officials have expressed their understanding of the gravity of the damage caused and promised to fix the situation. While Jordan is currently developing its indigenous resources, an initiative that might take years to materialize, it is also looking for alternative, secure and cheaper sources for natural gas to make up for the shortfall. Egypt’s alleged technical difficulties might not be the only ones standing in the way of Egypt honoring its obligations towards Jordan. Egypt is suffering from natural gas shortfalls at home and has even completely halted supplies to neighboring Israel.

Israel is not equally impacted by the disruptions of Egyptian gas, if not at all. Substantial deposits of the same hydrocarbon in its exclusive economic zone constitute a lucrative answer to the country’s natural gas needs, and for decades to come. The offshore finds could even resolve the energy needs of the two neighboring countries, Egypt and Jordan, as recently hinted by the plan of building a pipeline to connect Israel to Jordan by 2016 and by the progress of the Egyptian-Israeli gas deal talks. Exporting the natural gas would ensure the inflow of billions of shekels in revenue for Israel and would allow the continued development of Israel’s gas fields.

While the Tamar field has already started supplying gas in March 2013, the Leviathan is expected to come online in 2017. Israel has recently signed an export agreement with its first customer, the Palestinian authority, in line with its strategy to export natural gas to immediate neighbors as a starting point. The geopolitics of the Eastern Mediterranean region are changing becoming tremendously shaped by new or/and improved - yet still subtle - energy collaborations and partnerships that translate into energy security and independence for some, and cheaper and more constant sources of natural gas for others.

Karen Ayat is an analyst focused on energy geopolitics in the Eastern Mediterranean.  Email Karen on ayat_karen@hotmail.com. Follow her on Twitter: @karenayat