Studies on 20 establishments show possibility to conserve 20% of their
Jordan Times
2 Jul 2007
By Samir Ghawi
Jul. 2--AMMAN -- Technical and economic studies conducted on 20 establishments showed that there is a possibility of conserving 20 per cent of their energy consumption, Energy and Mineral Resources Minister Khalid Shraideh told an executive club lunch on Sunday.
Shraideh spoke about the future strategy of Jordan's energy sector saying that the National Petroleum Company (NPC) is seeking a joint venture partner to explore and develop the Risha gas field and the necessary infrastructure.
Noting that current production is 21 million cubic feet per day, the minister said the output is expected to increase to 45 million cubic feet per day during 2007-2008.
He pointed out that as part of the long-term strategy, gas production from the Risha field is planned to reach 100-150 million cubic feet per day as there is potentially significant undeveloped gas.
The minister told the guests attending the lunch, held by the American Chamber of Commerce in Jordan (Amcham-Jordan), that natural gas is currently fuelling 85 per cent of total available capacity at Aqaba, Samra and Rehab power stations.
Within the plan to enhance the usage of natural gas to replace oil products, Shraideh expected large industries to begin the conversion programme to burning natural gas before the end of 2008.
He expected the gas distribution networks in large cities to develop, starting the fourth quarter of this year.
"The gas distribution and construction of the first Car Gas Fuel Station in Aqaba is expected to be completed by the end of 2007," he said.
Shraideh added: "Construction of the gas distribution network in Amman and Zarqa is expected to start in the fourth quarter of 2007. Supplying gas to customers will commence in the second half of 2009".
He stressed that all the investments will be private.
Asked whether the use of gas will lower prices in the Kingdom, he tied this factor to other elements, like cost, but remarked that if, for example, the cement factory starts using gas, the prices of cement could be less by 30-35 per cent.
According to the minister, Jordan imports 200 million cubic feet per day of gas from Egypt.
"Jordan is highly dependent on imported energy and the cost of energy imports has been a major burden on the economy," he said, noting that 95 per cent of total energy demand is imported.
Without giving a specific figure, he estimated the cost of energy imports last year to be equal to 20 per cent of gross domestic product.
"Crude oil is imported from Saudi Arabia at a rate of 100,000 barrels per day," the minister said. He added that importing from Iraq by pipeline is the best option and that Baghdad and Amman have agreed to investigate this project.
Asked whether it is possible to have oil discoveries in Jordan, Shraideh said there are signs that oil exists in the Kingdom but not in commercial quantities.
Notwithstanding the importance of gas and crude oil, Shraideh described oil shale as a top energy resource for Jordan where proven reserves are estimated at 40 billion tonnes.
"The government signed four memoranda of understanding with four interested companies for Al Lajoun and Al Attarat areas in order to allow these companies to conduct bankable feasibility studies," he said. "If the results of the studies meet the criteria set in the memoranda, negotiations will start to grant the companies a concession agreement."
The companies are: International Corporation for Oil Shale Investment/Saudi investors and local company; Oil Shale Energy Jordan/Estonian investors; Jordan Energy and Mining Limited/British firm; Petrobras/Brazilain Company.
According to Shraideh, the government will invite additional international companies to invest in oil shale in other areas starting with Al Attarat during the second half of 2007.
As for deep oil shale, a memorandum of understanding was signed with Shell company on June 12, 2006 to evaluate, develop and exploit the deep oil shale resources for extraction of oil through a process called the In-Situ Conversion Process (ICP). Under this memorandum, Shell and the government will test the presence of commercial viable oil shale depots within an approximate area of 35,000- square-kilometres.
The government and Shell are in the process of negotiations on a concession agreement that provides Shell the right to explore and produce oil shale within an area of 20,000-square-kilometres.
This project will go through several phases which include exploration, appraisal, a pilot test, detailed design, and contract tendering for the commercial phase. "Negotiations are expected to be concluded during the second half of 2007", the minister remarked.
The minister also spoke about reform at the Jordan Petroleum Refinery Company (JPRC), the electricity sector and renewable energy.
He mentioned that after the end of concession in February 2008, the refined products sector will be extensively reformed in order to develop a competitive and efficient industry.
"Following the end of the concession agreement, JPRC will operate on a commercial basis and will continue to play a major role in the refined products sector," Shraideh said.
Noting that the refinery configuration will be changed to meet future demand profile, he estimated the investment required for the refinery expansion at approximately $1.34 billion.
The reform will not only be in terms of upgrading the refinery because a number of new companies will be formed.
That will include a logistics firm to manage storage and product handling , new marketing companies which will buy products from JPRC refinery or import products.
Retail companies will purchase products from marketing firms and operate retail stations to supply customers.
The minister stressed that all kinds of subsidies will be removed and the international parity price mechanism will be applied. He also emphasised that all energy activities will be regulated by the Electricity Regulatory Commission.
On electricity, the minister pointed out that Jordan imported 472Gwh from Egypt and 42Gwh from Syria in 2006, describing the Kingdom as " a main crossing point for many of the electrical interconnection projects within the Middle East region".
He expected the electricity privatisation programme involving the Central Electricity Generating Company, the Electricity Distribution Company and the Irbid District Electricity Company to be completed by the end of this year.
Shraideh concluded by highlighting renewable energy, saying that the target is to have it contribute around 10 per cent of electricity generation in 2015.
"Jordan has a strong wind regime, especially on the northern and western sides of the country where annual average wind speed exceeds seven miles per second," the minister said.
He added that a feasibility study is being conducted on two promising sites in Kamsheh in the north and Fujeij/Shobak in the south and that a tendering process for these two sites will be launched in 2007.