By Ahmed Al Azzam

Jordan’s presently known exploitable hydrocarbon resources consist of limited quantities of crude oil and natural gas.

The Kingdom is facing an alarming energy crisis because it depends entirely on imported crude oil and natural gas to meet its domestic energy demand.

Egypt, which supplies Jordan with over 90 per cent of its gas, accounting for more than 80 per cent of power generation, is no longer a reliable long-term energy partner because of the continuous gas flow disruptions. This disruption goes back to 2010.The justification was always technical issues with the gas wells.

Since February 2011, the pumping station that feeds both the East Mediterranean gas pipeline to Israel and the Arab gas pipeline to Jordan and onwards to Syria and Lebanon has been viciously attacked nine times despite the renegotiated prices. This has resulted in over 120 days, so far, of gas shutoffs.

The attacks are believed to have been carried out by disgruntled tribes in the Sinai region who oppose Egypt’s relationship with Israel and the contracts that were secured under the Mubarak regime with Jordan and Israel.

The problem of gas shortage in Jordan is severe. Energy demand is growing rapidly, at around 3 per cent per year. Electricity demand, a key indicator of potential economic growth, is growing at more than 6 per cent a year. The Jordanian government needs to meet rising energy demand to ensure social stability and economic prosperity.

Jordan’s weakening economy and growing fiscal deficit makes substituting gas with other fuels, such as diesel and heavy fuel oil, financially burdensome. These alternatives are both more expensive and produce greater carbon emissions. Switching to more expensive fuels would cost Jordan more than $1,700 million per year, around 4 per cent of the country’s GDP.

The government is already struggling with a fiscal deficit and would need to increase borrowing to purchase more costly fuels. This would pose another drag on the national economy, resulting in greater wage and pension cuts, with destabilising ripple effects.

Jordan has also mulled the nuclear option, though financial constraints and the risks associated with introducing nuclear power in the region make this option highly unlikely and risky.

While Iran has offered to supply Jordan with gas to make up for lost Egyptian imports, this option would increase the Iranian influence in the region and pose strategic risks to Jordan. Creating a Jordanian dependence on Iran for gas would increase Tehran’s ability to pressure Amman on issues related to regional security. This would erode Jordanian sovereignty and introduce a new strategic vulnerability into the region.

Developing strategic dependence on Iran would also complicate the US-Jordan relations and might invoke calls in the US to reexamine the economic aid and military assistance to Jordan.

Jordan’s energy sector strategy has concentrated mainly on the diversification of the sources that supply energy. The recent discovery of natural gas in the Eastern Mediterranean would enable Israel, in an atmosphere of peace in the region, with the opportunity to export gas to Jordan and boost bilateral economic relations. Such exports would ignite large-scale economic projects which are highly feasible, like fertilisers, methanol and electricity generation plants. These projects would add force to the Jordanian economy and help solve many chronic structural economic problems in Jordan, enhancing and deepening stable regional relationships.

Moreover, building a large electricity generation plant with long-term purchase power agreements with both the Israelis and the Palestinians would make the Kingdom a net electricity exporter.

The construction of an Israel-Jordan pipeline would be far less expensive, and faster, than one to Europe, for example, which could be an option for Israel. This, in turn, will enable negotiating the price Jordan pays for gas.

Four options exist for the pipeline construction. One is a northern corridor that would connect the Israeli section of a pipeline to Irbid, a 35-km portion of land. The Jordanian government has already secured land in this area, given an earlier defunct plan to build a north-south railway around Irbid.

A second option would entail the construction of a pipeline that would run through the West Bank. This would create the opportunity for Israel to provide gas to the Palestinian Authority, which would further develop its economy and create a new and mutually beneficial dimension to the Palestinian-Israeli relationship.

The third option would be to have the pipe run south of the Dead Sea and the fourth to have multiple connections all the way along the Jordan-Israel borders. This last option would reduce the risk of any disruption.

The writer, managing director at International Technical Assistance Consultants, is an international energy economics expert. He contributed this article to The Jordan Times.