Visiting the bustling city of Amman recently, one wonders how Jordan is providing all the energy to drive its economy after being described as one of the energy “have-nots” of the region.
Energy consumption is growing rapidly, where, according to the International Energy Agency (IEA), energy supply increased from about 2.7 million tons of oil equivalent (mtoe) in 1985 to 7.73-mtoe in 2013, while domestic energy supply was nil in 1985 and only 0.28-mtoe in 2013.
In 2013, oil was the main energy source at 83.3 per cent, gas at 11.8 per cent, coal at 2.8 per cent and renewables at 2 per cent. Therefore, almost 96 per cent of supplies are imported and this adds a strain on the economy and finances. Imports comprised about 6.6-mtoe of oil, 0.213 of coal, 0.795 of gas. Gas production was only 0.111-mtoe and renewables at 0.145.
For many years, oil imports were essentially from Iraq, by trucks from Haditha. But lately this route became unavailable and Jordan is importing via the port of Aqaba and by truck to Zarqa refinery and consumers.
With increasing oil consumption and prices internationally, Jordan began seriously to consider reducing its dependence on oil and gas by seeking to develop its vast oil shale resources. Deposits are located in about 60 per cent of the country and with an estimated resource base of 70 billion tons, the fourth largest in the world.
According to the National Energy Research Centre in Jordan, “near-surface, exploitable reserves are estimated at more than 50 billion metric tons, with extractable crude oil equivalent to about 50 billion barrels of oil.”
Although exploration and tests were carried out since the 1980s, there was no oil shale interest until 2011 when several companies considered both shale oil extraction and oil shale combustion for power generation.
By 2017, shale oil production may reach 52,000 tons a year from the Attarat and Karak deposits. Development of potential shale reserves along the Jordan-Iraq border may also start in earnest and significant quantities may be produced by 2020.
According to reports, Jordan signed a “$2 billion [Dh7.34 billion] agreement with the Saudi Arabian Corporation for Oil Shale, for the right to extract and develop from a 4.2-square mile area of Jordan’s Attarat region. By 2019, plans [are] to start producing 3,000 barrels of oil per day from oil shale, with production rising to 30,000 in 2025.”
The Jordan Oil Shale Company owned by Shell has been appraising an area since 2013 and, if all goes well, it may start production in commercial quantities in late 2020.
Shale is slated to be widely used for direct burning and power generation in a 460-MW plant owned by an Estonian, Malaysian and Chinese consortium. The project — 100km south-west of Amman — including its shale extraction is expected to cost $2 billion. Estonia’s use of oil shale to fuel power generation facilities goes back to 1924 and capacity is now 2,000MW.
The refinery in Zarqa, built in 1961, expanded as the demand for products increased. The current capacity is 90,000-100,000 barrels a day (bd) and expansion to 130,000-bd is underway. In 2014, Jordan imported 73,000-bd of products — especially diesel, fuel oil and gasoline — and production was about 77,000-bd, according to OAPEC statistics.
Perhaps the refinery is operating at less than distillation capacity due to limitations in downstream units. The expansion may correct this deficiency and produce better products of gasoline and low sulpher diesel. The Jordan Petroleum Refinery Company is seeking funds of $1.6 billion for this project.
Natural gas reserves in Jordan are modest at 6 billion cubic meters (bcm) and concentrated in the Risha gas field east of the country close to the borders with Iraq. In 2003 it produced 0.39-bcm of gas while its current output is around 0.313-bcm a year to fuel a nearby power plant generating 10 per cent of Jordan’s electricity.
Jordan imported natural gas through the Arab Gas Pipeline stretching from Al Arish in Egypt to Aqaba and then to northern Jordan to three major power stations. This supplies Jordan with approximately 1-bcm a year in a 30-year agreement with Egypt, which started deliveries in August 2003.
Repeated attacks on Al Arish from 2011 to 2014, meant to stop exports to Israel, and reduced production in Egypt prevented further deliveries to Jordan, which was forced to burn more diesel and fuel oil at an enormous cost of $7 million a day. Jordan is about to complete a $65 million LNG import terminal in Aqaba, which will allow it to import more than 0.6-bcm a year.
During this month’s Jordan Energy Summit in Amman, memorandums of understanding with Algeria and Egypt were signed for the first to deliver LNG and LPG by September and for the second to deliver pipeline gas by 2021.
The rest of Jordan’s energy story is for next week.
