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French Version

Oil in Jordan : Could it be true, finally?

It is a familiar adage that in many ways modern Jordan is an island of stability free from the problems and major issues that affect the rest of the Arab countries. It is also well known as being one of the few ‘dry’ states in the Middle East in terms of energy resources.

However recent trends are suggesting that this may soon be about to change.

Changes in the fundamental dynamics of the global oil industry and, most specifically, the sources of energy supplies to the kingdom are at the base of a shift in hopes for Jordan’s oil reserves. In an interview with The Star, Dr Maher Hijazin, director general of the Natural Resources Authority (NRA), which is responsible for the allocation and supervision of oil and gas exploration, explained that although Jordan had been preliminary surveyed for oil reserves as part of an ongoing process since 1947, there had only been a government interest totalling some JD150m of commited funds to drilling, “with initial findings not revealing any great reserves and oil available from Iraq at $13 a barrel, there was neither a domestic requirement or international interest to develop anything”.

Although initial seismic surveys did not reveal any so-called “elephant fields”, such as those found in Saudi Arabia and Iraq, the same rock structures that hold these reserves in neighboring countries continue through Jordan and onwards into southern Syria. Furthermore Syria has made commercial finds of both oil and gas in its section of the structure. Sonoran Energy, an Arizona based oil company whose ties to Jordan stem in a large part from its purchase of Baron Oil—the company currently exploring the Azraq area to the east of Amman—is one of three companies that have chosen to disregard the previous negative reports about Jordan and engage in further exploration.

Peter Ostenfeld-Rosenthal, CEO of Sonoran, suggested to The Star that in the past insufficient expertise and analysis of the seismic survey data taken had overlooked possible finds. “Jordan is in a geologically fractious zone, with the Dead Sea Rift Valley as the most prescient example, and as such we are likely to see oil bearing rocks not being in a single place but fractured into a number of chambers,” explained the Danish-born Ostenfeld-Rosenthal. “Modern 3-D seismic surveys and horizontal drilling techniques allow us to find and exploit reserves that in the past may have been written off as uneconomical or simply missed,” he added. Despite the high expectations of Sonoran, Hijazin was more frank in his reasoning of the recent interest in Jordan, “With oil prices ranging in the high $50’s and a poor business climate in other areas, notably Iraq, marginal fields that offer stability and some hope of a good return are becoming viable.”

Alongside Sonoran Energy there are three other groups currently exploring in Jordan, the National Petroleum Company (state owned) in the Risha area bordering Iraq; Petrel Resources PLC (a joint Irish-UK company) in the east Safawi area; and TransGlobal Oil (a US company) in the Dead Sea area.

The Dead Sea area is of particular interest, as for a long time it has been thought that there is oil beneath it; it suffers from a similar form of natural oil pollution as the Caspian where oil can be found lying on the surface of the water.

TransGlobal Oil Ltd., also US based, has been exploring the area since 1997 and has entered into a Price-Sharing Agreement (PSA) with Jordan that obliges them to fully explore the area, including drilling a number of wells and the division of any reserves found. This process is now gathering significant pace with their General Manager, Nick Abraham, saying that soon we will see “the most massive effort in exploration in Jordan’s history”. He also noted the particular difficulties in assessing Jordan’s reserves caused by the geo-physical nature of the area, but that, “the specialist technical skills that TransGlobal have employed are now close to “cracking the code” so as to be able to interpret the surveys that have been taken of the Dead Sea basin”.

Similar PSA’s with Sonoran and Petrel are shortly to be offered to parliament for ratification, a process that has taken several months and is hopefully due for conclusion and legal formalization in the coming weeks. Hijazin commented that “for Jordan to realistically look for increased investment in the oil exploration sector this process should be accelerated and streamlined, however, the constitution dictates that all mineral concerns must be written into the law; we have prepared a draft law that should bypass this stipulation and make it possible to grant a PSA in a much shorter space of time”. This may prove to be a valid move as the north and south Sirhan areas bordering Saudi Arabia, currently without any interested parties and having been subjected to only one preliminary survey in the past, hold the promise of further reserves. “Oil exploration is a gamble, and given the lack of access and difficult geography of the region Sirhan has been very much overlooked,” Hijazin revealed.

A lack of infrastructure and resources for exploration is something that all the companies investing in Jordan are facing as their next challenge. Currently the National Petroleum Company operates a drilling rig in its area and TransGlobal has gained access on a long-term lease to suitable drilling rigs, but both Petrel and Sonoran are searching for a rig for their drilling. This lack of domestic resources and the current international hunger for rigs from major companies such as Saudi-Aramco have made for this to be a very competitive market.

This situation would provide an opening for Jordanian engineering firms to expand into. However, Nick Abraham of TransGlobal counseled prudence on this matter. “We do not see oil as a panacea to the Jordanian economy and although a lively sub-contraction industry will hopefully develop we believe that the Jordanian government has learnt from other neighboring countries not to over-hype the matter,” Abraham said. One of the companies, specializing in this sector is the Geophysical Services Center (GSC), started by former members of the Natural Resources Authority, which offers survey interpretation services across the region and is based in Amman. Abraham further commented on this “we try to use Jordanian firms wherever possible and hope to involve more in the future as we expand”.

For many years there has been speculation over the possibility of oil deposits but now, in both the NRA and the exploration companies, there appears to be something of a quiet confidence that belies previous skepticism. “Although we are still in the exploration stages there should be changes on the way in the coming year; we’re expecting something good,” Abraham maintains.

David Watt
The Daily Star

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