Sunday, August 27, 2006

The cleaner option

By Oula Al Farawati
Egyptian gas started late to flow in pipes stretching from southern to northern Jordan to provide much needed clean gas to power plants in the north, marking a new era during which Jordan will gradually move to the use of natural gas instead of other oil derivatives.

This is the second leg of the Arab Pipeline Project which includes laying pipelines from Al Arish in Egypt to the Turkish borders to supply Jordan, Syria, Lebanon and then Turkey and Iraq with relatively cheap gas from Egypt, which enjoys potential natural gas reserves of 70 trillion cubic feet. This project will make it one of the world's top 10 natural gas exporters in the next two years.

According to Director of the Natural Gas Department at the Ministry of Energy and Natural Resources Marwan Al Baka’in, the project will raise the efficiency of the two major power plants in the north Al Rihab and Samra by 50%.

“With the completion of the project inside Jordan, we will start on gradually building the networks which will relay cheaper and environment-friendly natural gas to factories, houses and vehicles,” said Mr. Baka’in.

Egyptian natural gas is already flowing to Jordan through an underwater pipeline to Aqaba. Under the Arab Gas Pipeline Project signed in 2001, Egypt is to supply Jordan, Syria and Lebanon with natural gas for 30 years. The entire pipeline is projected to cost some $1billion.

Mr. Baka’in will not disclose the potential savings of the project on the national economy.

“This information cannot be revealed, but everyone knows for sure that the potential savings are huge and this was the main motive behind the project,” he said.

However, the ministry’s Secretary General Khaldoun Qteishat had told JBM in a recent interview that if a plan to switch most major industries to the use of natural gas succeeds, it could cut the Jordanian oil bill by up to 50%.

The project comes as the government is gradually lifting its long-time subsidies on oil derivatives, pushed by the escalating oil prices and the loss of the Iraqi oil grant due to the war on Iraq.

The first and second stages of the project were carried out on a (build, own, operate and transfer) BOOT basis by the Jordanian Egyptian Fajr for Natural Gas Transmission and Supply, which was established by an Egyptian consortium.

According to the official, the government signed an agreement with the Egyptian side in April 2005, which allocated (1) bcm of gas to be used by industrial customers.

“The pipeline is anticipated to supply gas to most of large industrial customers during the second half of 2006. We have already talked to industries and sent them the draft industrial gas sales agreement for review,” Baka’in said.

He added that the Jordan Cement Factories Company Ltd. Plant in Rashadeyya, the Arab Potash Company, the Jordan Phosphate Mines Company, and some industrial cities have already agreed to convert their machines to operate using natural gas, expecting more private sector companies to follow suit.

“We hope that industries consider the use of natural gas very seriously… The investment that companies will put into converting their operation will be covered in one year because natural gas is much cheaper than fuel oil and gas oil,” Mr. Baka’in told JBM in an interview.

Mr. Baka’in revealed that financial consultant Charles River& Associates International has completed a study on the establishment of a gas pipeline network to be laid in Amman and Zarqa to provide natural gas to households and vehicles and expected the project to start by the end of 2006 and cost more than $200 million.

He also said that a joint venture agreement by Fajr and the Aqaba Development Company has been signed to establish a compressed natural gas station and a workshop for converting cars from the use of gasoline to the use of natural gas.

“It costs something like $1000 to convert one car… the use of natural gas will be more economical for taxi drivers who will be able to cover the cost of the conversion in less than one year,” he said.

No comments: