By Taylor Luck

AMMAN – A drop in the amount of natural gas supplied by Egypt is forcing the Kingdom to explore new energy sources, according to a senior official.

Natural gas, which the Kingdom receives from Egypt at preferential prices, fuelled 90 per cent of electricity generation last year, but the amount of gas supplied to Jordan has dropped to 70 per cent of its previous levels over the last two months.

With the gas supply now at the minimum level stipulated in a bilateral agreement, the country’s power plants are relying on costlier diesel and heavy oil to make up the difference, and the government has begun to look for long-term alternatives, according to Minister of Energy and Mineral Resources Khalid Irani.

“Natural gas has become a big challenge and this is why we need to diversify,” Irani told The Jordan Times over the phone on Thursday.

Cairo and Amman reached an initial agreement in 2004 to provide the Kingdom with 2.4 billion cubic metres of natural gas at preferential prices, with an “agreement in principle” to eventually provide an additional 900 million cubic metres. With availability issues on the Egyptian side, which have led to severe power cuts in that country, the supply to the Kingdom has recently begun dipping below the minimum level.

“There is always a chance for a new arrangement and we keep communication open with our Egyptian counterparts,” Irani said, noting that the ministry hopes to receive increased quantities of natural gas by next year.

“Meanwhile, we have to use other fuels, heavy fuels and diesel, which is costly, but there are no other alternatives in the short term,” he said.

The Electricity Regulatory Commission (ERC) is reviewing electricity tariffs based on the new costs, he said, noting that by law the commission is able to impose additional costs based on increases in fuel prices.

The ERC was unavailable for comment.

In the medium term, the ministry is currently “exploring two different tracks”, the first of which is pursuing natural gas imports from other countries, Irani explained, noting that it has sent a team to Qatar, and is exploring the import of natural gas from Iraq and Algeria.

The ministry has also contacted consultants to explore the feasibility and cost of natural gas imports and joint ventures in the field, he said, indicating that the ministry has spoken with companies such as Shell and BP to learn more about natural gas reserves and import opportunities across the region.

Another major pillar of the ministry’s efforts to secure new energy sources is oil shale, the minister said, noting that last week he visited Estonia, which produces 100 per cent of its electricity from the resource.

“I saw the power plant, 1,600 megawatts (MW) using oil shale. I saw it; it is real and it is possible,” he said.

Jordan is home to some 50 billion tonnes of shale reserves, according to various estimates. Earlier this year, Eesti Energia, Estonia’s state-owned electricity company, signed an agreement to extract and retort oil shale in the central region, with production expected to reach 36,000 barrels of shale oil a day.

During last week’s visit, Irani said he met with Eesti Energia CEO Sandor Liive and Estonian Prime Minister Andrus Ansip to discuss establishing an electricity plant in Jordan and applying Estonia’s experience as a model for the Kingdom.

“They are expanding their own plant to 2,400MW; they will be generating as much electricity from oil shale as we generate in the entire country,” he said, stressing that oil shale meets EU environmental standards.

According to Irani, a preliminary feasibility study for an oil shale electricity plant in the central region will be completed by January and forwarded for review.

Meanwhile, he stressed that renewable energy remains “at the heart of our strategy”, noting that the ministry has finalised an action plan to proceed with renewable energy projects and pricing.

Irani said officials expect to present the “renewable energy roadmap” to a ministerial committee and to Prime Minister Samir Rifai next week.

In parallel, the ministry is working with the World Bank to proceed with the Renewable Energy and Energy Efficiency Fund, which will provide funding for projects in the field and potential electricity pricing schemes.

The Cabinet has provided the fund with JD20 million.

Under the national energy strategy, renewable energy is to account for 10 per cent of the Kingdom’s energy mix, with oil shale accounting for 14 per cent. The country’s reliance on natural gas is to drop from 40 per cent to 29 per cent.