• Natural Gas News

    Israel Risks Losing Jordanian Market



Still stuck in internal policy debates, Israel risks losing its next-door neighbour Jordan as a potential customer for its newly found natural gas.

by: Karen Ayat

Posted in:

Top Stories, Israel

Israel Risks Losing Jordanian Market

While Israel is still stuck in internal policy debates, Jordan, Israel’s next-door neighbour and a potential export market, may have found alternative sources of natural gas.

Despite its ongoing energy crisis and a desperate need to import cheap natural gas from a reliable source, Jordan’s lawmakers seem no longer as keen to close a deal with Israel.

Dependent on imported energy for 98% of its needs, Jordan previously relied on Egyptian gas to satisfy most of its domestic demand. The disruptions in the flow of gas in the aftermath of the Arab spring caused a sudden spike in Jordan’s energy bill and forced the country into a severe crisis.

Texan Noble Energy announced in September 2014 the signing of a non-binding Letter of Intent (LOI) to supply natural gas from Israel’s 22 trillion cubic feet (Tcf) Leviathan field to Jordan’s National Electric Power Company (Nepco). Under the terms of the LOI, Noble and its partners would supply a base gross quantity of 1.6 trillion ft³ from Leviathan to Jordan over a period of 15 years, beginning at a rate of 300mn ft³/d. A final deal would be subject to regulatory approvals.

Since the signing of the non-binding agreement, no progress has been achieved and Jordan is said to be considering the purchase of natural gas from Algeria. A Jordanian delegation announced it had conducted talks with a gas company in Algeria that may lead to an import agreement, according to a quote by an unidentified senior source in the Jordanian Parliament as announced on Israel Radio.

Jordan has alternatives

Earlier this week, Jordanian lawmakers did not hide their strong opposition to a deal with Israel in a 90-minute parliamentary session. The speakers advanced that Jordan no longer needs Israel as it could import gas via its newly built LNG terminal in Aqaba or from Iraq through the future Basra-Aqaba pipeline.

They also stressed that the plunge in oil prices changes the equation, as Jordan is no longer forced to buy expensive fuel products to make up for the shortfalls in natural gas.

The Jordanian opposition to a deal with Israel is mainly political. Speakers are opposed to depending on their Israeli neighbour for natural gas when they do not support Israel’s policies against Palestinians and fear that Israel could use Jordan’s energy vulnerability for political gains.

Jordan is also eyeing neighbouring Cyprus and other Arab countries for possible relief. Furthermore, the country has initiated efforts to develop indigenous resources that could end its energy troubles in the longer term.

The question mark over the Israeli-Jordanian deal is bad news for Israel. While the country still struggles to finalise the natural gas framework signed by the prime minister Benjamin Netanyahu in December of 2015, losing regional markets would be an additional hurdle to overcome.

Israel has been considering its immediate neighbours as first destinations for its newly found riches before it finalises an export strategy for further afield.

On February 15, Netanyahu appeared before Israel’s supreme court to defend the terms on offer, and stressed the importance of its ratification at the expense of losing the markets of Jordan, Turkey, Egypt, the Palestinians and the European Union.

Netanyahu has been facing opposition from lawmakers and activists who claim that the deal would create a monopoly in Israel’s domestic market that could lead to higher prices at home.

Karen Ayat