Jordan Times
Monday, January 26, 2004
Interregional gas deal signed in Amman
By Khalid Dalal
AMMAN — Jordan, Egypt, Syria and Lebanon signed on Sunday a deal to begin installing the second section of a $1 billion pipeline to supply natural gas from Egypt to the other three countries.Prime Minister Faisal Fayez and his counterparts of Egypt Atef Obeid, Syria Mohammed Naji Otri and Lebanon Rafiq Hariri signed the $270 million agreement, under which a 393-kilometre section of pipes will be set up from Aqaba to the Rihab Power Station in the north of the Kingdom.
“Implementing the project shows the determination of our Arab countries to boost their economic cooperation and joint action,” Fayez said during a signing ceremony.
An Egyptian consortium of Egypt Holding Gas Company, GASCO, Petrojet and Emppi will carry out the second stage through Al Fajr Company, a local firm that groups Jordanian, Egyptian and other Arab investors.
“The agreement signed on Sunday includes licensing Al Fajr Company to construct and operate the pipeline on a build, operate, own and transfer (BOOT) basis. It also sets the criteria for purchasing gas from Egypt and selling it to the power plants in the Kingdom to generate electricity, according to a Prime Ministry statement.
The project's second phase will have an annual capacity of 10 billion cubic metres and is expected to be completed by the end of 2005. The pipeline is expected to be extended to the Syrian port of Banias and the Lebanese refinery of Zahrani in 2006, and then to Cyprus, Turkey and other European countries. Jordan's share stands at two billion cubic metres a year.
The first 265-kilometre section, inaugurated last year by His Majesty King Abdullah and Egyptian President Hosni Mubarak, starts from the offshore gas fields in Egypt's Al Arish area through Taba via an underwater pipeline to Aqaba.
It currently provides Aqaba Thermal Power Station with natural gas to generate around 650 megawatts of electricity, according to Minister of Energy and Mineral Resources Azmi Khreisat. This, he said, provides Jordan with more than 48 per cent of its maximum generation capacity of 1,500 megawatts.
The project is designed to supply Jordan with its needs of natural gas for 30 years at preferential prices, saving the treasury $50 million annually, the minister added.
The project will reduce the cost of imported energy, which equals almost 10 per cent of the GDP and about 40-45 per cent of the country's total export earnings.
Egypt has proven natural gas reserves of 1,656 billion cubic metres, according to October 2002 figures.