Jordan pressing pipeline projects with Iraq, Egypt

May 21, 2003
Even as it implements plans to receive supplies of natural gas from Egypt, the Jordanian government is also proceeding with a long-awaited project to build a new pipeline for the import of crude oil from Iraq.

By Eric Watkins
Middle East Correspondent

NICOSIA, May 21 -- Even as it implements plans to receive supplies of natural gas from Egypt, the Jordanian government is also proceeding with a long-awaited project to build a new pipeline for the import of crude oil from Iraq.

In June, Egyptian President Hosni Mubarak and King Abdallah II of Jordan will open Phase One of the Arab Mashreq natural gas pipeline as Egypt begins shipping supplies of 1.1 billion cu m/year (bcmy) to Jordan's port city of Aqaba on the Gulf of Eilat.

The 250 km pipeline starts at Egypt's Mediterranean offshore gas fields, passes through Al Arish in Sinai and then on to Taba where a 15 km subsea section continues to the Aqaba Thermal Power Station (ATPS), the first in Jordan to rely on supplies of Egyptian natural gas.

The 650 Mw ATPS used to rely on heavy fuel oil but will switch to gas once Egyptian supplies begin to arrive.

According to Jordanian Oil Minister Mohammad Batayneh, who inaugurated ATPS on May 17, Egypt "will start providing gas to the station in a few weeks."

From Aqaba, the pipeline will be extended to southern and central Jordan to supply gas to power stations there, while plans call for the eventual extension of the pipeline to Syria and Lebanon, as well as Turkey and possibly Europe.

According to Egyptian Oil Minister Sameh Fahmi, revenues of the project are expected to reach up to £12 billion (Egypt.) over the next 7 years as the pipeline reaches all of the Arab Mashreq countries—Jordan, Syria, and Lebanon—with a capacity ultimately projected at 10 bcmy.

Jordan-Iraq pipeline
Jordan, meanwhile, is carrying on with plans to construct an oil pipeline extending 300 km from its 100,000 b/d refinery at Zarqa, 27 km northeast of Amman, to the Iraqi border.

Plans call for the pipeline to be extended from the Iraqi order 450 km to oil pumping stations at Haditha, 260 km northwest of Baghdad, eventually replacing transport of Iraqi oil to Jordan via tanker trucks.

"The initial pipeline capacity is 100,000 b/d, and the ultimate design capacity is 150,000 b/d, which can be expanded at a later day to 350,000 b/d," Azmi Said Khreisat, secretary general of Jordan's energy ministry, told a Mideast pipeline conference in Abu Dhabi last year. "Instead of trucks, it will be the pipeline."

The German-Austrian group ILF Consulting Engineers has been acting as project consultant and is expected to begin detailed examination of offers already submitted. "The company will help the government study offers submitted by three international companies from Russia, Britain, and Oman, and then select one of them to implement the project," a Jordanian official said on Sunday.

Jordan is reported to have short-listed three groups for the pipeline, including a consortium of state-run Indian Oil Corp and Russia's OAO Stroytransgaz, Petrofac Ltd. of the UK, and Oman's Shanfari Group.

The Jordanian official said the consultants will assist the government in evaluating the companies' technical and financial proposals in a four-step evaluation process that will be applied to select the most appropriate offer.

The Jordanian government floated a tender in late 2001 for construction of the pipeline over its territory and will finance construction at an estimated cost of $120-140 million on a BOOT (build, own, operate, and transfer) basis.

Prior to the US-led war on Iraq, Jordan received all of its crude oil courtesy of a special arrangement with the regime of Iraqi President Saddam Hussein: 50% an outright gift and 50% at heavily discounted rates. With the onset of the war, however, Jordan had to negotiate with other Persian Gulf countries for the supply of its oil needs (OGJ Online, Mar. 28, 2003).

Jordanian officials have nonetheless expressed hope that the country will resume imports of Iraqi oil as soon as a new Iraqi government is formed and a new deal can be reached. "Jordan will proceed with extending the pipeline because Iraq will remain its strategic oil supplier," a Jordanian official said.