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French Version

First Stage of Arab Gas Pipeline completed

The new Arab Gas Pipeline, which in its initial stage runs from El Arish Natural Gas Terminal to Amman is now due to be completed by the end of December this year, 15 months ahead of schedule.

The announcement came at the Eastern Mediterranean Gas forum, which was held in Amman on December 12 – 13.

The completion marks the first stage of a pipeline that is set to radically alter energy usage in Jordan, promising to supply piped natural gas to thousands of households.

In light of rising oil prices and declining reserves, natural gas—a mixture of hydrocarbons though primarily composed of methane—has become a major source of energy as countries around the world seek to diversify their energy supplies away from reliance solely on oil.

The Arab Gas Pipeline is part of a major project to supply Egyptian gas to the Levant countries, Jordan, Syria and Lebanon as well as feasibly extending into the Turkish gas distribution network and from there onto Europe. The conference saw talks from a variety of government, industry and academic experts on the efforts to develop and supply natural gas across the Eastern Mediterranean region.

There were several talks on the integration and cooperation that result from the construction of trans-national overland distribution networks, whilst balancing this against so called “hard”concerns for energy security. The example being stated was that of Lebanon, which is due to tap into the Arab pipeline in the coming years, with its ongoing political wranglings with Syria. For whilst a pipeline distribution system is one option, more recent developments in the field, namely the shipping of large quantities of Liquefied Natural Gas (LNG) by sea to an offshore terminal offers a supply that is not at the mercy of “upstream” nations.

Central amongst the proponents of a diversified supply was Nic Braley, vice president of Charles Rivers Associates, a London based consultancy, which had advised on the Arab Gas Pipeline project from its inception. In response to several concerns for the security and viability of the Lebanese section of the pipeline by Ali Berrou, Gas advisor at the Lebanese Ministry of Energy and Water, he responded that the best, most flexible and certainly most secure option was for the Lebanese gas industry to invest in an LNG terminal that could serve both the needs of their power stations and their domestic market. The conference highlighted two major case studies in gas supply, those of Peru and Poland.

The Peruvian case highlighted the expertise that are available indigenously in the Eastern Mediterranean Region with a project to build a distribution network for the capital Lima, a task that is becoming increasingly common as cities across the Middle East convert to taking their energy from piped natural gas. The project had been successfully executed by an Egyptian consortium including Petrol GS and ENNAP.

Highlighting also the success of the early completion of the Jordanian section of the Arab Gas Pipeline, Yehia El-Ridi, chairman of the Jordanian Egyptian Fajr Natural Gas Transmission and Supply company, emphasized that the capability and ambition is present in the eastern Mediterranean region to “thoroughly modernize our use of gas and integrate ourselves into the wider European distribution network”. However although the Arab Gas Pipeline only currently envisions tapping Egyptian supplies, the conference also discussed the less immediate future when demand in the Levant, and in the case of integrating into European networks, might outstrip supply.

The former Oil Minister for Iraq, Issam A.R. Chalabi, outlined that the Iraqi gas fields, centered on the Kirkuk region in the North East of the country, are still relatively undeveloped but with time and some major investments in infrastructure they could serve as a major supply point. Although Jordan has often been considered one of the few Arab countries not blessed with indigenous fossil fuel resources, the forum sought to reinforce the fact that the Jordanian oil and gas sector is in a state of growth as small-scale exploration projects are beginning across the country.

Hazem Ramini, a geophysicist from the Natural Resources Authority (NRA), questioned to some extent the wisdom of such major investment in infrastructure to supply foreign energy resources when Jordan has had such little investment made in exploration. In light of the large capital investments that are involved in oil and gas exploration the Jordanian government is currently offering highly attractive terms to small scale exploration companies that might be looking to operate in the country with a 60/40 client to government revenue ratio for any commercial finds of under the 100,000 bpd level. Ramini sought to emphasize the confidence that the Natural Resources Authority has in finding further oil and gas reserves in the country in the near future. Munther Akroush, also of NRA, laid out the reasons for Jordan’s previous lack of proven reserves as being due to the fractured nature of the country’s geography. The effect of the Jordan Valley fault line has been to disrupt and fold many of the hydrocarbon bearing layers that lie beneath the surface making accurate surveys very difficult. On a more domestic level the conference also paid attention to the change that must take place amongst actual domestic gas consumers prior to the full potential of a natural gas pipeline network being considered.

The most immediate market for the stream is to supply the power generation sector, with Jordan being at the forefront in the eastern Mediterranean in investing in gas fired power stations. However the intention is also to rapidly begin supplying homes and businesses. John Young, also of Charles Rivers Associates, outlined that although gas usage in the Middle East was already widespread, almost all users currently rely on Liquefied Petroleum Gas (LPG) from canisters, an expensive and inflexible energy source. Although he admitted that the initial investment in a domestic distribution network and the adaptation of LPG appliances to piped gas (of a different hydrocarbon composition) the final service of natural gas was far superior, “offering a cheaper product that has the capacity to supply major users, such as hotels and industry with a cheap energy source, alongside a cheap, clean and significantly safer energy source to the small scale user.”

Amman,20December2005
Redaction
The Star


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