The pendulum appears to be swinging in the favour of Jordan as the host of the first leg of a regional gas pipeline.
An Arab diplomatic source told the Jordan Times that both Egypt and Syria look favorably on laying the pipeline from Egypt's Al Arish to Aqaba and extending it northward to Syria, from where it would branch into Lebanon and Turkey.
“It basically boils down to practicalities,” said the diplomat, who declined to be named. “A pipeline overland would cost less and it would be more secure.
At the same time, power generation is becoming a crucial issue for a very important project in Jordan, which is the Aqaba Special Economic Zone.”
“Syria also favors this [option],” he said. Jordan was a latecomer to the regional gas line project, which initially grouped only Egypt, Syria and Lebanon.
The three countries late last year announced that they planned the construction of a maritime gas line traveling from Al Arish, in Egypt, through international waters to Tripoli, Lebanon.
Egypt appears to have had a crucial role in bringing Jordan on board in January as a possible alternative route.
The benefits that would accrue to Jordan as the “anchor” of the gas line are many.
In a recent interview with the Jordan Times, Minister of Energy Wael Sabri said that, in addition to millions of dollars in transit fees Jordan would collect as the anchor, the Kingdom could also count on gas at a “low rate, as a first user of the gas.”
“We would procure the gas at very competitive rates from Egypt, and also be able to employ a local workforce to build and maintain a landline,” he said, pointing out that an overland line is estimated to be 30-60 per cent less expensive than a line through international waters.
“Gas also is a clean burning fuel, and it costs 40 percent less to burn than heavy fuel oil. Having the gas line in Jordan would also allow the establishment of a petrochemicals industry, especially in the ASEZ when gas is available, and it will open facilities for investors to come and construct an internal network that would include residential areas.”
In short, the stakes are high. However, since January, conflicting statements have emerged from meetings of the four energy ministers, the latest of which was nearly two weeks ago in Beirut, concerning the route.
Sabri has reiterated that the “higher committee of energy ministers” had agreed that Jordan was the most reasonable alternative, but Lebanese officials two weeks ago following the meeting of the four energy ministers said the plan to have a line through international waters remained.
A technical committee is said to be “studying the options,” and the pipeline is likely to feature high on the agenda of meetings between Prime Minister Ali Abul Ragheb and Lebanese Prime Minister Rafiq Hariri who is due in Amman today.
An industry source told the Jordan Times that the dispute over the line has as “much to do with politics and business interests as with cost.”
“Lebanon prefers an offshore line because it would be the anchor country and it would capitalize on transit fees,” the source said.
“Jordan wants an onshore line for the same purpose. If the line is offshore, they will not get the transit fees and they will be at the end of the line which will make the gas more expensive, especially gas that is from an offshore line.”
“And we have to know whether or not Syria wants Jordan to be the hub and who the business interests are in Lebanon,” the source explained.
“There is another question, which is Israel and their negotiations with Egypt. These are going to have an impact, because it seems a lot of interests are overlapping.”
EMG, an Egyptian-Israeli consortium and the Israel Electric Corporation are nearing the end of negotiations on the supply of 1.7 billion cubic meters of natural gas a year to Israel.
A final contract is expected to be signed within three to four months, Israel's Haaretz newspaper reported last week.
The volume represents 54 percent of Israel's natural gas requirements over 10 years.
The Hebrew daily also reported that the European Investment Bank would finance 30 per cent of the $1 billion investment required to set up the pipeline from Egypt to Turkey, which the daily said would be laid by EMG, comprised of the Egyptian national oil company, Egyptian businessman Hussein Salem and Israel's Merhav group.
The diplomat said Egypt's negotiations with Israel would “influence” the project, as would negotiations with Cyprus over the coming few months. However, he said he foresaw no problems with Israel's “involvement” in the project.
“Israel is not a partner or a participant,” the diplomat said. “It is only a consumer of the gas. It could connect from the land or from the sea.”
By Amy Henderson
( Jordan Times )
© 2001 Mena Report (www.menareport.com)
